Exhibit 99.1

LOGO

 

 

 

 

 

Supplemental Information

Third Quarter 2008

 

 

 

 

 

This information is preliminary and based on company data available at the time of the presentation. It speaks only as of the particular date or dates included in the accompanying pages. Bank of America does not undertake an obligation to, and disclaims any duty to, correct or update any of the information provided. Any forward-looking statements in this information are subject to the forward-looking language contained in Bank of America’s reports filed with the SEC pursuant to the Securities Exchange Act of 1934, which are available at the SEC’s website (www.sec.gov) or at Bank of America’s website (www.bankofamerica.com). Bank of America’s future financial performance is subject to risks and uncertainties as described in its SEC filings.


Bank of America Corporation and Subsidiaries

Table of Contents

   Page

Consolidated Financial Highlights

   2

Supplemental Financial Data

   3

Consolidated Statement of Income

   4

Consolidated Balance Sheet

   5

Capital Management

   6

Core Net Interest Income - Managed Basis

   7

Quarterly Average Balances and Interest Rates

   8

Quarterly Average Balances and Interest Rates - Isolating Hedge Income/Expense

   9

Year-to-Date Average Balances and Interest Rates

   10

Year-to-Date Average Balances and Interest Rates - Isolating Hedge Income/Expense

   11

Business Segment View Graphs

   12

Global Consumer and Small Business Banking

  

Total Segment Results

   13

Quarter-to-Date Business Results

   14

Year-to-Date Business Results

   15

Key Indicators

   16

E-commerce & BankofAmerica.com

   17

Credit Card Data

   18

Quarter-to-Date Mass Market Small Business Banking: Relationship View

   19

Year-to-Date Mass Market Small Business Banking: Relationship View

   20

Global Corporate and Investment Banking

  

Total Segment Results

   21

Quarter-to-Date Business Results

   22

Year-to-Date Business Results

   23

Quarter-to-Date Customer Relationship View

   24

Year-to-Date Customer Relationship View

   25

Business Lending Key Indicators

   26

Capital Markets and Advisory Services Key Indicators

   27

Banc of America Securities U.S. Market Share and Product Ranking Graph

   28

Special Purpose Entities Liquidity Exposure

   29

Super Senior Collateralized Debt Obligation Exposure

   30

Subprime Super Senior Collateralized Debt Obligation Carrying Values

   31

Global Wealth and Investment Management

  

Total Segment Results

   32

Quarter-to-Date Business Results

   33

Year-to-Date Business Results

   34

Key Indicators

   35

All Other

  

Total Segment Results

   36

Outstanding Loans and Leases

   37

Quarterly Average Loans and Leases by Business Segment

   38

Commercial Credit Exposure by Industry

   39

Net Credit Default Protection by Maturity Profile and Credit Exposure Debt Rating

   40

Selected Emerging Markets

   41

Nonperforming Assets

   42

Quarterly Net Charge-offs/Losses and Net Charge-off/Loss Ratios

   43

Year-to-Date Net Charge-offs/Losses and Net Charge-off/Loss Ratios

   44

Allocation of the Allowance for Credit Losses by Product Type

   45

Exhibit A: Non - GAAP Reconciliations

   46

 

  1


Bank of America Corporation and Subsidiaries

Consolidated Financial Highlights

 

(Dollars in millions, except per share information; shares in thousands)

 

     Nine Months Ended
September 30
         Third
Quarter

2008
        Second
Quarter

2008
        First
Quarter

2008
        Fourth
Quarter

2007
         Third
Quarter

2007
    
     2008         2007                                             

Income statement

                                          

Net interest income

   $ 32,254       $ 25,276         $ 11,642       $ 10,621       $ 9,991       $ 9,165        $ 8,617   

Noninterest income

     24,848         28,753           7,979         9,789         7,080         3,639          7,480   

Total revenue, net of interest expense

     57,102         54,029           19,621         20,410         17,071         12,804          16,097   

Provision for credit losses

     18,290         5,075           6,450         5,830         6,010         3,310          2,030   

Noninterest expense, before merger and restructuring charges

     29,953         26,845           11,413         9,447         9,093         10,269          8,627   

Merger and restructuring charges

     629         270           247         212         170         140          84   

Income tax expense (benefit)

     2,433         7,125           334         1,511         588         (1,183 )        1,658   

Net income

     5,797         14,714           1,177         3,410         1,210         268          3,698   

Diluted earnings per common share

     1.10         3.25           0.15         0.72         0.23         0.05          0.82   

Average diluted common shares issued and outstanding

     4,493,506         4,483,465           4,563,508         4,457,193         4,461,201         4,470,108          4,475,917   

Dividends paid per common share

   $ 1.92       $ 1.76         $ 0.64       $ 0.64       $ 0.64       $ 0.64        $ 0.64   
 

Performance ratios

                                          

Return on average assets

     0.43    %      1.27         0.25    %      0.78    %      0.28    %      0.06     %      0.93    %

Return on average common shareholders’ equity

     4.68         14.88           1.97         9.25         2.90         0.60          11.02   

At period end

                                                                                    

Book value per share of common stock

   $ 30.01       $ 30.45         $ 30.01       $ 31.11       $ 31.22       $ 32.09        $ 30.45   

Tangible book value per share of common stock (1) 

     12.08         15.25           12.08         13.65         13.73         14.62          15.25   

Market price per share of common stock:

                                          

Closing price

   $ 35.00       $ 50.27         $ 35.00       $ 23.87       $ 37.91       $ 41.26        $ 50.27   

High closing price for the period

     45.03         54.05           37.48         40.86         45.03         52.71          51.87   

Low closing price for the period

     18.52         47.00           18.52         23.87         35.31         41.10          47.00   

Market capitalization

     159,672         223,041           159,672         106,292         168,806         183,107          223,041   
 

Number of banking centers - domestic

     6,139         5,748           6,139         6,131         6,148         6,149          5,748   

Number of branded ATMs - domestic

     18,584         17,231           18,584         18,531         18,491         18,753          17,231   

Full-time equivalent employees

     247,024         198,000           247,024         206,587         209,096         209,718          198,000   

 

 

(1) Tangible book value per share of common stock is a non-GAAP measure. For a corresponding reconciliation of common tangible shareholders’ equity to a GAAP financial measure, see Supplemental Financial Data on page 3. We believe the use of this non-GAAP measure provides additional clarity in assessing the results of the Corporation.

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  2


Bank of America Corporation and Subsidiaries

Supplemental Financial Data

 

(Dollars in millions)

Fully taxable-equivalent basis data

 

     Nine Months Ended
September 30
          Third
Quarter

2008
         Second
Quarter

2008
         First
Quarter

2008
         Fourth
Quarter

2007
         Third
Quarter

2007
     
     2008          2007                                

Net interest income

   $ 33,148        $ 26,375              $ 11,920            $ 10,937        $ 10,291        $ 9,815        $ 8,992    

Total revenue, net of interest expense

     57,996          55,128            19,899          20,726          17,371          13,454          16,472    

Net interest yield

     2.86     %      2.60          2.93     %      2.92     %      2.73     %      2.61     %      2.61     %

Efficiency ratio

     52.73          49.19            58.60          46.60          53.32          77.36          52.89    

 

Reconciliation to GAAP financial measures

 

Supplemental financial data presented on an operating basis is a basis of presentation not defined by accounting principles generally accepted in the United States (GAAP) that excludes merger and restructuring charges. We believe that the exclusion of merger and restructuring charges, which represent events outside our normal operations, provides a meaningful period-to-period comparison and is more reflective of normalized operations.

 

Return on average common shareholders’ equity and return on average tangible shareholders’ equity utilize non-GAAP allocation methodologies. Return on average common shareholders’ equity measures the earnings contribution of a unit as a percentage of the shareholders’ equity allocated to that unit. Return on average tangible shareholders’ equity measures the earnings contribution of the Corporation as a percentage of shareholders’ equity reduced by goodwill. These measures are used to evaluate our use of equity (i.e., capital) at the individual unit level and are integral components in the analytics for resource allocation. The efficiency ratio measures the costs expended to generate a dollar of revenue. We believe the use of these non-GAAP measures provides additional clarity in assessing the results of the Corporation.

 

Other companies may define or calculate supplemental financial data differently. See the tables below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months ended September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007 and September 30, 2007, and the nine months ended September 30, 2008 and 2007.

 

Reconciliation of net income to operating earnings

 

     Nine Months Ended
September 30
          Third
Quarter

2008
         Second
Quarter

2008
         First
Quarter

2008
         Fourth
Quarter

2007
         Third
Quarter

2007
     
                                
     2008          2007                                          

Net income

       $ 5,797        $ 14,714          $ 1,177        $ 3,410        $ 1,210        $ 268        $ 3,698    

Merger and restructuring charges

     629          270            247          212          170          140          84    

Related income tax benefit

     (205 )        (100 )          (64 )        (78 )        (63 )        (52 )        (31 )  
                                                                              

Operating earnings

       $ 6,221        $ 14,884          $ 1,360        $ 3,544        $ 1,317        $ 356        $ 3,751    
                                                                              
Reconciliation of ending common shareholders’ equity to ending common tangible shareholders’ equity     
                                  

Ending common shareholders’ equity

       $ 136,888        $ 135,109          $ 136,888        $ 138,540        $ 139,003        $ 142,394        $ 135,109    

Ending goodwill

     (81,756 )        (67,433 )          (81,756 )        (77,760 )        (77,872 )        (77,530 )        (67,433 )  
                                                                              

Ending common tangible shareholders’ equity

       $ 55,132        $ 67,676          $ 55,132        $ 60,780        $ 61,131        $ 64,864        $ 67,676    
                                                                              
Reconciliation of average shareholders’ equity to average tangible shareholders’ equity     
                                  

Average shareholders’ equity

       $ 160,890        $ 133,878          $ 166,454        $ 161,428        $ 154,728        $ 144,924        $ 134,487    

Average goodwill

     (79,150 )        (66,309 )          (81,977 )        (77,815 )        (77,628 )        (78,308 )        (67,499 )  
                                                                              

Average tangible shareholders’ equity

       $ 81,740        $ 67,569          $ 84,477        $ 83,613        $ 77,100        $ 66,616        $ 66,988    
                                                                              
Operating basis     
 

Return on average assets

     0.46     %      1.28          0.28     %      0.81     %      0.30     %      0.08     %      0.94     %

Return on average common shareholders’ equity

     5.08          15.06            2.48          9.63          3.20          0.85          11.18    

Return on average tangible shareholders’ equity

     10.17          29.45            6.40          17.05          6.87          2.12          22.21    

Efficiency ratio (1)

     51.65          48.70            57.36          45.58          52.35          76.32          52.38    

 

 

(1) Fully taxable-equivalent basis

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  3


Bank of America Corporation and Subsidiaries

Consolidated Statement of Income

 

(Dollars in millions, except per share information; shares in thousands)

 

     Nine Months Ended
September 30
         Third
Quarter

2008
    Second
Quarter

2008
    First
Quarter

2008
    Fourth
Quarter

2007
    Third
Quarter

2007
 
     2008     2007                 

Interest income

                    

Interest and fees on loans and leases

   $ 41,797     $ 40,318         $ 14,261     $ 13,121     $ 14,415     $ 15,363     $ 14,111  

Interest on debt securities

     9,295       7,046           3,621       2,900       2,774       2,738       2,334  

Federal funds sold and securities purchased under agreements to resell

     2,920       5,974           912       800       1,208       1,748       1,839  

Trading account assets

     6,937       7,059           2,344       2,229       2,364       2,358       2,519  

Other interest income

     3,133       3,428           1,058       977       1,098       1,272       1,230  
                                                            

Total interest income

     64,082       63,825           22,196       20,027       21,859       23,479       22,033  
                                                            

Interest expense

                    

Deposits

     11,954       12,840           3,846       3,520       4,588       5,253       4,545  

Short-term borrowings

     10,452       16,369           3,223       3,087       4,142       5,598       5,519  

Trading account liabilities

     2,250       2,619           661       749       840       825       906  

Long-term debt

     7,172       6,721           2,824       2,050       2,298       2,638       2,446  
                                                            

Total interest expense

     31,828       38,549           10,554       9,406       11,868       14,314       13,416  
                                                            

Net interest income

     32,254       25,276           11,642       10,621       9,991       9,165       8,617  
 

Noninterest income

                    

Card income

     10,212       10,486           3,122       3,451       3,639       3,591       3,595  

Service charges

     7,757       6,493           2,722       2,638       2,397       2,415       2,221  

Investment and brokerage services

     3,900       3,720           1,238       1,322       1,340       1,427       1,378  

Investment banking income

     1,645       1,801           474       695       476       544       389  

Equity investment income (loss)

     1,330       3,747           (316 )     592       1,054       317       904  

Trading account profits (losses)

     (1,810 )     491           (384 )     357       (1,783 )     (5,380 )     (1,388 )

Mortgage banking income

     2,564       516           1,674       439       451       386       155  

Insurance premiums

     1,092       548           678       217       197       213       235  

Gains on sales of debt securities

     362       71           10       127       225       109       7  

Other income (loss)

     (2,204 )     880           (1,239 )     (49 )     (916 )     17       (16 )
                                                            

Total noninterest income

     24,848       28,753           7,979       9,789       7,080       3,639       7,480  
                                                            

Total revenue, net of interest expense

     57,102       54,029           19,621       20,410       17,071       12,804       16,097  
 

Provision for credit losses

     18,290       5,075           6,450       5,830       6,010       3,310       2,030  
 

Noninterest expense

                    

Personnel

     14,344       13,931           5,198       4,420       4,726       4,822       4,169  

Occupancy

     2,623       2,211           926       848       849       827       754  

Equipment

     1,208       1,018           440       372       396       373       336  

Marketing

     1,813       1,644           605       571       637       712       552  

Professional fees

     1,071       770           424       362       285       404       258  

Amortization of intangibles

     1,357       1,209           464       447       446       467       429  

Data processing

     1,905       1,372           755       587       563       590       463  

Telecommunications

     814       750           288       266       260       263       255  

Other general operating

     4,818       3,940           2,313       1,574       931       1,811       1,411  

Merger and restructuring charges

     629       270           247       212       170       140       84  
                                                            

Total noninterest expense

     30,582       27,115           11,660       9,659       9,263       10,409       8,711  
                                                            

Income (loss) before income taxes

     8,230       21,839           1,511       4,921       1,798       (915 )     5,356  

Income tax expense (benefit)

     2,433       7,125           334       1,511       588       (1,183 )     1,658  
                                                            

Net income

   $ 5,797     $ 14,714         $ 1,177     $ 3,410     $ 1,210     $ 268     $ 3,698  
                                                            

Preferred stock dividends

     849       129           473       186       190       53       43  
                                                            

Net income available to common shareholders

   $ 4,948     $ 14,585         $ 704     $ 3,224     $ 1,020     $ 215     $ 3,655  
                                                            
 

Per common share information

                    

Earnings

   $ 1.11     $ 3.30         $ 0.15     $ 0.73     $ 0.23     $ 0.05     $ 0.83  

Diluted earnings

     1.10       3.25           0.15       0.72       0.23       0.05       0.82  

Dividends paid

     1.92       1.76           0.64       0.64       0.64       0.64       0.64  
                                                            

Average common shares issued and outstanding

     4,469,517       4,424,269           4,543,963       4,435,719       4,427,823       4,421,554       4,420,616  
                                                            

Average diluted common shares issued and outstanding

     4,493,506       4,483,465           4,563,508       4,457,193       4,461,201       4,470,108       4,475,917  
                                                            

 

 

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  4


Bank of America Corporation and Subsidiaries

Consolidated Balance Sheet

 

(Dollars in millions)

 

     September 30
2008
    June 30
2008
    September 30
2007
 

Assets

      

Cash and cash equivalents

   $     39,341     $     39,127     $     34,956  

Time deposits placed and other short-term investments

   11,709     7,649     8,829  

Federal funds sold and securities purchased under agreements to resell

   87,038     107,070     135,150  

Trading account assets

   174,859     167,837     179,365  

Derivative assets

   45,792     42,039     30,843  

Debt securities

   258,677     249,859     177,296  

Loans and leases, net of allowance:

      

Loans and leases

   942,676     870,464     793,537  

Allowance for loan and lease losses

   (20,346 )   (17,130 )   (9,535 )

Total loans and leases, net of allowance

   922,330     853,334     784,002  

Premises and equipment, net

   13,000     11,627     9,762  

Mortgage servicing rights (includes $20,811, $4,250 and $3,179 measured at fair value)

   21,131     4,577     3,417  

Goodwill

   81,756     77,760     67,433  

Intangible assets

   9,167     9,603     9,635  

Loans held-for-sale

   27,414     23,630     30,672  

Other assets

   138,963     122,763     107,403  

Total assets

   $1,831,177     $1,716,875     $1,578,763  

Liabilities

      

Deposits in domestic offices:

      

Noninterest-bearing

   $   201,025     $   199,587     $   165,343  

Interest-bearing

   577,503     497,631     434,728  

Deposits in foreign offices:

      

Noninterest-bearing

   3,524     3,432     3,950  

Interest-bearing

   91,999     84,114     95,201  

Total deposits

   874,051     784,764     699,222  

Federal funds purchased and securities sold under agreements to repurchase

   225,729     238,123     199,293  

Trading account liabilities

   68,229     70,806     87,155  

Derivative liabilities

   26,466     21,095     19,012  

Commercial paper and other short-term borrowings

   145,812     177,753     201,155  

Accrued expenses and other liabilities (includes $427, $507 and $392 of reserve for unfunded lending commitments)

   72,141     55,038     48,932  

Long-term debt

   257,710     206,605     185,484  

Total liabilities

   1,670,138     1,554,184     1,440,253  

Shareholders’ equity

      

Preferred stock, $0.01 par value; authorized - 100,000,000 shares; issued and outstanding - 7,602,067, 7,602,067 and 143,739 shares

   24,151     24,151     3,401  

Common stock and additional paid-in capital, $0.01 par value; authorized - 7,500,000,000 shares; issued and outstanding - 4,562,054,554, 4,452,947,217 and 4,436,855,341 shares

   65,361     61,109     60,276  

Retained earnings

   77,695     79,920     84,027  

Accumulated other comprehensive income (loss)

   (5,647 )   (1,864 )   (8,615 )

Other

   (521 )   (625 )   (579 )

Total shareholders’ equity

   161,039     162,691     138,510  

Total liabilities and shareholders’ equity

   $1,831,177     $1,716,875     $1,578,763  

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  5


Bank of America Corporation and Subsidiaries

Capital Management

 

(Dollars in millions)

 

     Third
Quarter

2008 (1)
        Second
Quarter

2008
        First
Quarter
2008
        Fourth
Quarter

2007
        Third
Quarter
2007
    

Risk-based capital:

                             

Tier 1 capital

   $ 100,248       $ 101,439       $ 93,899       $ 83,372       $ 94,108   

Total capital

     153,327         154,983         146,531         133,720         135,786   

Risk-weighted assets

     1,328,084         1,230,307         1,250,942         1,212,905         1,145,069   

Tier 1 capital ratio

     7.55    %      8.25    %      7.51    %      6.87    %      8.22    %

Total capital ratio

     11.54         12.60         11.71         11.02         11.86   

Tangible equity ratio (2)

     4.03         4.62         4.16         3.62         4.09   

Tier 1 leverage ratio

     5.50         6.07         5.59         5.04         6.20   

 

 

(1) Preliminary data on risk-based capital
(2) Tangible equity ratio equals shareholders’ equity less goodwill and intangible assets divided by total assets less goodwill and intangible assets.

Share Repurchase Program

 

No common shares were repurchased in the third quarter of 2008.

75.0 million shares remain outstanding under the 2008 authorized program.

109.1 million shares were issued in the third quarter of 2008, of which 106.8 million shares were issued in the Countrywide acquisition.

LOGO

 

 

* Preliminary data on risk-based capital

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  6


Bank of America Corporation and Subsidiaries

Core Net Interest Income - Managed Basis

 

(Dollars in millions)

 

    Nine Months Ended
September 30
         Third
Quarter
2008
        Second
Quarter
2008
        First
Quarter
2008
        Fourth
Quarter
2007
        Third
Quarter
2007
     
    2008         2007                                 

Net interest income (1)

                             

As reported

  $ 33,148       $ 26,375         $ 11,920       $ 10,937       $ 10,291       $ 9,815       $ 8,992    

Impact of market-based net interest income (2)

    (4,125 )       (1,908 )         (1,448 )       (1,369 )       (1,308 )       (810 )       (789 )  
                                                                       

Core net interest income

    29,023         24,467           10,472         9,568         8,983         9,005         8,203    

Impact of securitizations (3)

    6,654         5,820           2,310         2,254         2,090         2,021         2,009    
                                                                       

Core net interest income - managed basis

  $ 35,677       $ 30,287         $ 12,782       $ 11,822       $ 11,073       $ 11,026       $ 10,212    
                                                                       
 

Average earning assets

                             

As reported

  $ 1,544,617       $ 1,352,177         $ 1,622,466       $ 1,500,234       $ 1,510,295       $ 1,502,998       $ 1,375,795    

Impact of market-based earning assets (2)

    (385,517 )       (414,363 )         (377,630 )       (375,274 )       (403,733 )       (407,315 )       (407,066 )  
                                                                       

Core average earning assets

    1,159,100         937,814           1,244,836         1,124,960         1,106,562         1,095,683         968,729    

Impact of securitizations

    102,481         103,028           101,743         103,131         102,577         104,385         104,181    
                                                                       

Core average earning assets - managed basis

  $ 1,261,581       $ 1,040,842         $ 1,346,579       $ 1,228,091       $ 1,209,139       $ 1,200,068       $ 1,072,910    
                                                                       
 

Net interest yield contribution (1, 4)

                             

As reported

    2.86     %     2.60         2.93     %     2.92     %     2.73     %     2.61     %     2.61     %

Impact of market-based activities (2)

    0.48         0.88           0.43         0.49         0.52         0.67         0.77    
                                                                       

Core net interest yield on earning assets

    3.34         3.48           3.36         3.41         3.25         3.28         3.38    

Impact of securitizations

    0.43         0.40           0.43         0.45         0.42         0.38         0.42    
                                                                       

Core net interest yield on earning assets - managed basis

    3.77     %     3.88         3.79     %     3.86     %     3.67     %     3.66     %     3.80     %
                                                                       

 

 

(1) Fully taxable-equivalent basis
(2) Represents the impact of market-based amounts included in the Capital Markets and Advisory Services business within Global Corporate and Investment Banking. For the nine months ended September 30, 2008 and 2007, the impact of market-based net interest income excludes $75 million and $44 million, and for the three months ended September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007 and September 30, 2007, respectively, excludes $23 million, $25 million, $27 million, $26 million and $22 million of net interest income on loans for which the fair value option has been elected and is not considered market-based income.
(3) Represents the impact of securitizations utilizing actual bond costs. This is different from the segment view which utilizes funds transfer pricing methodologies.
(4) Calculated on an annualized basis.

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  7


Bank of America Corporation and Subsidiaries

Quarterly Average Balances and Interest Rates - Fully Taxable-equivalent Basis

 

(Dollars in millions)

 

     Third Quarter 2008    Second Quarter 2008    Third Quarter 2007    
     Average
Balance
   Interest
Income/
Expense
   Yield/
Rate
       Average
Balance
   Interest
Income/
Expense
   Yield/
Rate
       Average
Balance
   Interest
Income/
Expense
   Yield/
Rate
   

Earning assets

                                

Time deposits placed and other short-term investments

   $ 11,361    $ 101    3.54   %    $ 10,310    $ 87    3.40   %    $ 11,879    $ 148    4.92   %

Federal funds sold and securities purchased under agreements to resell

     136,322      912    2.67        126,169      800    2.54        139,259      1,839    5.27  

Trading account assets

     191,757      2,390    4.98        184,547      2,282    4.95        194,661      2,604    5.33  

Debt securities (1)

     266,013      3,672    5.52        235,369      2,963    5.04        174,568      2,380    5.45  

Loans and leases (2):

                                

Residential mortgage

     260,748      3,712    5.69        256,164      3,541    5.54        274,385      3,928    5.72  

Home equity

     151,142      2,124    5.59        120,265      1,627    5.44        98,611      1,884    7.58  

Discontinued real estate

     22,031      399    7.25        —        —      —          —        —      —    

Credit card - domestic

     63,414      1,682    10.55        61,655      1,603    10.45        57,491      1,780    12.29  

Credit card - foreign

     17,075      535    12.47        16,566      512    12.43        11,995      371    12.25  

Direct/Indirect consumer (3)

     85,392      1,790    8.34        82,593      1,731    8.43        72,978      1,600    8.70  

Other consumer (4)

     3,723      80    8.78        3,953      84    8.36        4,322      96    8.90  

Total consumer

     603,525      10,322    6.82        541,196      9,098    6.75        519,782      9,659    7.39  

Commercial - domestic

     224,117      2,852    5.06        219,537      2,762    5.06        176,554      3,207    7.21  

Commercial real estate (5)

     63,220      727    4.57        62,810      737    4.72        38,977      733    7.47  

Commercial lease financing

     22,585      53    0.93        22,276      243    4.37        20,044      246    4.91  

Commercial - foreign

     33,467      377    4.48        32,820      366    4.48        25,159      377    5.95  

Total commercial

     343,389      4,009    4.64        337,443      4,108    4.89        260,734      4,563    6.95  

Total loans and leases

     946,914      14,331    6.03        878,639      13,206    6.04        780,516      14,222    7.25  

Other earning assets

     70,099      1,068    6.07        65,200      1,005    6.19        74,912      1,215    6.46  

Total earning assets (6)

     1,622,466      22,474    5.52        1,500,234      20,343    5.44        1,375,795      22,408    6.48  

Cash and cash equivalents

     36,030              33,799              31,356        

Other assets, less allowance for loan and lease losses

     247,195                    220,580                    173,414              

Total assets

   $ 1,905,691                  $ 1,754,613                  $ 1,580,565              

Interest-bearing liabilities

                                

Domestic interest-bearing deposits:

                                

Savings

   $ 32,297    $ 58    0.72   %    $ 33,164    $ 64    0.77   %    $ 31,510    $ 50    0.62   %

NOW and money market deposit accounts

     278,520      973    1.39        258,104      856    1.33        215,078      1,104    2.04  

Consumer CDs and IRAs

     218,862      1,852    3.37        178,828      1,646    3.70        165,840      1,949    4.66  

Negotiable CDs, public funds and other time deposits

     36,039      291    3.21        24,216      195    3.25        17,392      227    5.20  

Total domestic interest-bearing deposits

     565,718      3,174    2.23        494,312      2,761    2.25        429,820      3,330    3.07  

Foreign interest-bearing deposits:

                                

Banks located in foreign countries

     36,230      266    2.91        33,777      272    3.25        43,727      564    5.12  

Governments and official institutions

     11,847      72    2.43        11,789      77    2.62        17,206      218    5.03  

Time, savings and other

     48,209      334    2.76        55,403      410    2.97        41,868      433    4.09  

Total foreign interest-bearing deposits

     96,286      672    2.78        100,969      759    3.02        102,801      1,215    4.69  

Total interest-bearing deposits

     662,004      3,846    2.31        595,281      3,520    2.38        532,621      4,545    3.39  

Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings

     465,511      3,223    2.76        444,578      3,087    2.79        409,070      5,519    5.36  

Trading account liabilities

     77,271      661    3.40        70,546      749    4.27        86,118      906    4.17  

Long-term debt

     264,934      2,824    4.26        205,194      2,050    4.00        175,265      2,446    5.58  

Total interest-bearing liabilities (6)

     1,469,720      10,554    2.86        1,315,599      9,406    2.87        1,203,074      13,416    4.43  

Noninterest-bearing sources:

                                

Noninterest-bearing deposits

     195,841              190,721              169,860        

Other liabilities

     73,676              86,865              73,144        

Shareholders’ equity

     166,454                    161,428                    134,487              

Total liabilities and shareholders’ equity

   $ 1,905,691                  $ 1,754,613                  $ 1,580,565              

Net interest spread

         2.66   %          2.57   %          2.05   %

Impact of noninterest-bearing sources

                 0.27                    0.35                    0.56  

Net interest income/yield on earning assets

          $ 11,920    2.93   %           $ 10,937    2.92   %           $ 8,992    2.61   %

 

 

(1) Yields on AFS debt securities are calculated based on fair value rather than historical cost balances. The use of fair value does not have a material impact on net interest yield.
(2) Nonperforming loans are included in the respective average loan balances. Income on these nonperforming loans is recognized on a cash basis.
(3) Includes foreign consumer loans of $2.6 billion and $3.0 billion in the third and second quarters of 2008, and $3.8 billion in the third quarter of 2007.
(4) Includes consumer finance loans of $2.7 billion and $2.8 billion in the third and second quarters of 2008, and $3.2 billion in the third quarter of 2007; and other foreign consumer loans of $1.1 billion and $862 million in the third and second quarters of 2008, and $843 million in the third quarter of 2007.
(5) Includes domestic commercial real estate loans of $62.2 billion and $61.6 billion in the third and second quarters of 2008, and $38.0 billion in the third quarter of 2007.
(6) Interest income includes the impact of interest rate risk management contracts, which decreased interest income on the underlying assets $12 million and $104 million in the third and second quarters of 2008, and $170 million in the third quarter of 2007. Interest expense includes the impact of interest rate risk management contracts, which increased interest expense on the underlying liabilities $86 million and $37 million in the third and second quarters of 2008, and $226 million in the third quarter of 2007.

 

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  8


Bank of America Corporation and Subsidiaries

Quarterly Average Balances and Interest Rates - Fully Taxable-equivalent Basis - Isolating Hedge Income/Expense (1) 

 

(Dollars in millions)

 

     Third Quarter 2008    Second Quarter 2008    Third Quarter 2007      
     Average
Balance
   Interest
Income/
Expense
    Yield/
Rate
         Average
Balance
   Interest
Income/
Expense
    Yield/
Rate
         Average
Balance
   Interest
Income/
Expense
    Yield/
Rate
     

Earning assets

                             

Time deposits placed and other short-term investments (2) 

   $ 11,361    $ 105     3.68     %    $ 10,310    $ 91     3.56     %    $ 11,879    $ 152     5.06     %

Federal funds sold and securities purchased under agreements to resell (2) 

     136,322      948     2.78          126,169      867     2.75          139,259      1,936     5.54    

Trading account assets

     191,757      2,390     4.98          184,547      2,282     4.95          194,661      2,604     5.33    

Debt securities (2)

     266,013      3,675     5.52          235,369      2,963     5.04          174,568      2,385     5.46    

Loans and leases:

                             

Residential mortgage

     260,748      3,712     5.69          256,164      3,541     5.54          274,385      3,928     5.72    

Home equity

     151,142      2,124     5.59          120,265      1,627     5.44          98,611      1,884     7.58    

Discontinued real estate

     22,031      399     7.25          —        —       —            —        —       —      

Credit card - domestic

     63,414      1,682     10.55          61,655      1,603     10.45          57,491      1,780     12.29    

Credit card - foreign

     17,075      535     12.47          16,566      512     12.43          11,995      371     12.25    

Direct/Indirect consumer

     85,392      1,790     8.34          82,593      1,731     8.43          72,978      1,600     8.70    

Other consumer

     3,723      80     8.78          3,953      84     8.36          4,322      96     8.90    

Total consumer

     603,525      10,322     6.82          541,196      9,098     6.75          519,782      9,659     7.39    

Commercial - domestic (2) 

     224,117      2,820     5.01          219,537      2,795     5.12          176,554      3,220     7.24    

Commercial real estate

     63,220      727     4.57          62,810      737     4.72          38,977      733     7.47    

Commercial lease financing

     22,585      53     0.93          22,276      243     4.37          20,044      246     4.91    

Commercial - foreign (2)

     33,467      377     4.48          32,820      366     4.48          25,159      411     6.48    

Total commercial

     343,389      3,977     4.61          337,443      4,141     4.93          260,734      4,610     7.02    

Total loans and leases

     946,914      14,299     6.02          878,639      13,239     6.05          780,516      14,269     7.27    

Other earning assets (2)

     70,099      1,069     6.07          65,200      1,005     6.19          74,912      1,232     6.55    

Total earning assets - excluding hedge impact

     1,622,466      22,486     5.53          1,500,234      20,447     5.47          1,375,795      22,578     6.53    

Net hedge income (expense) on assets

            (12 )                 (104 )                 (170 )    

Total earning assets - including hedge impact

     1,622,466      22,474     5.52          1,500,234      20,343     5.44          1,375,795      22,408     6.48    

Cash and cash equivalents

     36,030             33,799             31,356       

Other assets, less allowance for loan and lease losses

     247,195                       220,580                       173,414                 

Total assets

   $ 1,905,691                     $ 1,754,613                     $ 1,580,565                 

Interest-bearing liabilities

                             

Domestic interest-bearing deposits:

                             

Savings

   $ 32,297    $ 58     0.72     %    $ 33,164    $ 64     0.77     %    $ 31,510    $ 50     0.62     %

NOW and money market deposit accounts (2) 

     278,520      973     1.39          258,104      851     1.33          215,078      1,099     2.03    

Consumer CDs and IRAs (2)

     218,862      1,765     3.21          178,828      1,535     3.45          165,840      1,797     4.30    

Negotiable CDs, public funds and other time deposits (2) 

     36,039      288     3.18          24,216      193     3.21          17,392      225     5.15    

Total domestic interest-bearing deposits

     565,718      3,084     2.17          494,312      2,643     2.15          429,820      3,171     2.93    

Foreign interest-bearing deposits:

                             

Banks located in foreign countries (2) 

     36,230      279     3.07          33,777      272     3.25          43,727      566     5.14    

Governments and official institutions

     11,847      72     2.43          11,789      77     2.62          17,206      218     5.03    

Time, savings and other

     48,209      334     2.76          55,403      410     2.97          41,868      433     4.09    

Total foreign interest-bearing deposits

     96,286      685     2.84          100,969      759     3.02          102,801      1,217     4.70    

Total interest-bearing deposits

     662,004      3,769     2.27          595,281      3,402     2.30          532,621      4,388     3.27    

Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings (2) 

     465,511      2,938     2.51          444,578      2,980     2.70          409,070      5,560     5.40    

Trading account liabilities

     77,271      661     3.40          70,546      749     4.27          86,118      906     4.17    

Long-term debt (2) 

     264,934      3,100     4.68          205,194      2,238     4.36          175,265      2,336     5.33    

Total interest-bearing liabilities - excluding hedge impact

     1,469,720      10,468     2.84          1,315,599      9,369     2.86          1,203,074      13,190     4.36    

Net hedge (income) expense on liabilities

            86                   37                   226      

Total interest-bearing liabilities - including hedge impact

     1,469,720      10,554     2.86          1,315,599      9,406     2.87          1,203,074      13,416     4.43    

Noninterest-bearing sources:

                             

Noninterest-bearing deposits

     195,841             190,721             169,860       

Other liabilities

     73,676             86,865             73,144       

Shareholders’ equity

     166,454                       161,428                       134,487                 

Total liabilities and shareholders’ equity

   $ 1,905,691                     $ 1,754,613                     $ 1,580,565                 

Net interest spread

        2.69             2.61             2.17    

Impact of noninterest-bearing sources

                  0.27                       0.35                       0.55    

Net interest income/yield on earning assets - excluding hedge impact

          $ 12,018     2.96     %           $ 11,078     2.96     %           $ 9,388     2.72     %

Net impact of hedge income (expense)

            (98 )   (0.03 )               (141 )   (0.04 )               (396 )   (0.11 )  

Net interest income/yield on earning assets

          $ 11,920     2.93     %           $ 10,937     2.92     %           $ 8,992     2.61     %

 

 

(1) This table presents a non-GAAP financial measure. The impact of interest rate risk management derivatives is shown separately. Interest income and interest expense amounts, and the yields and rates have been adjusted. Management believes this presentation is useful to investors because it adjusts for the impact of our hedging decisions and provides a better understanding of our hedging activities. The impact of interest rate risk management derivatives is not material to the average balances presented above.
(2) The following presents the impact of interest rate risk management derivatives on interest income and interest expense.

Interest income excludes the impact of interest rate risk management contracts, which increased (decreased) interest income on:

 

     Third Quarter 2008     Second Quarter 2008     Third Quarter 2007      

Time deposits placed and other short-term investments

                               $ (4 )                               $ (4 )                               $ (4 )  

Federal funds sold and securities purchased under agreements to resell

     (36 )     (67 )     (97 )  

Debt securities

     (3 )     —         (5 )  

Commercial - domestic

     32       (33 )     (13 )  

Commercial - foreign

     —         —         (34 )  

Other earning assets

     (1 )     —         (17 )  
                          

Net hedge income (expense) on assets

                               $ (12 )                               $ (104 )                               $ (170 )  
                          

Interest expense excludes the impact of interest rate risk management contracts, which increased (decreased) interest expense on:

NOW and money market deposit accounts

                               $ —                                   $ 5                                 $ 5    

Consumer CDs and IRAs

     87       111       152    

Negotiable CDs, public funds and other time deposits

     3       2       2    

Banks located in foreign countries

     (13 )     —         (2 )  

Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings

     285       107       (41 )  

Long-term debt

     (276 )     (188 )     110    
                          

Net hedge (income) expense on liabilities

                               $ 86                                 $ 37                                 $ 226    
                          

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  9


Bank of America Corporation and Subsidiaries

Year-to-Date Average Balances and Interest Rates - Fully Taxable-equivalent Basis

 

(Dollars in millions)

 

     Nine Months Ended September 30  
     2008    2007  
     Average
Balance
   Interest
Income/
Expense
   Yield/
Rate
        Average
Balance
   Interest
Income/
Expense
   Yield/
Rate
 

Earning assets

                    

Time deposits placed and other short-term investments

       $ 10,758        $ 282    3.50    %        $ 14,059        $ 505    4.80 %

Federal funds sold and securities purchased under agreements to resell

     135,846      2,920    2.87         157,139      5,974    5.07  

Trading account assets

     189,579      7,089    4.99         186,137      7,325    5.25  

Debt securities (1)

     240,347      9,470    5.25         179,589      7,225    5.37  

Loans and leases (2):

                    

Residential mortgage

     262,478      11,090    5.63         260,469      11,140    5.70  

Home equity

     129,402      5,623    5.80         94,179      5,342    7.58  

Discontinued real estate

     7,397      399    7.25         —        —      —    

Credit card - domestic

     62,784      5,059    10.76         57,148      5,444    12.74  

Credit card - foreign

     16,297      1,521    12.47         11,694      1,038    11.86  

Direct/Indirect consumer (3)

     82,242      5,220    8.48         68,281      4,344    8.51  

Other consumer (4)

     3,908      251    8.58         4,614      318    9.21  
                                    

Total consumer

     564,508      29,163    6.90         496,385      27,626    7.43  
                                    

Commercial - domestic

     218,702      8,812    5.38         168,948      9,180    7.26  

Commercial real estate (5)

     62,746      2,351    5.00         37,305      2,092    7.50  

Commercial lease financing

     22,364      557    3.32         19,828      638    4.29  

Commercial - foreign

     32,254      1,130    4.68         22,696      1,026    6.05  
                                    

Total commercial

     336,066      12,850    5.11         248,777      12,936    6.95  
                                    

Total loans and leases

     900,574      42,013    6.23         745,162      40,562    7.27  
                                    

Other earning assets

     67,513      3,202    6.33         70,091      3,333    6.35  
                                    

Total earning assets (6)

     1,544,617      64,976    5.61         1,352,177      64,924    6.41  
                                          

Cash and cash equivalents

     34,598               32,881      

Other assets, less allowance for loan and lease losses

     229,550               169,702      
                                          

Total assets

       $ 1,808,765                 $ 1,554,760      
                                          

Interest-bearing liabilities

                    

Domestic interest-bearing deposits:

                    

Savings

       $ 32,419        $ 172    0.71    %        $ 32,436        $ 138    0.57 %

NOW and money market deposit accounts

     261,918      2,968    1.51         213,230      3,027    1.90  

Consumer CDs and IRAs

     195,318      5,569    3.81         162,372      5,638    4.64  

Negotiable CDs, public funds and other time deposits

     30,838      806    3.49         15,690      554    4.72  
                                    

Total domestic interest-bearing deposits

     520,493      9,515    2.44         423,728      9,357    2.95  
                                    

Foreign interest-bearing deposits:

                    

Banks located in foreign countries

     36,401      938    3.44         42,025      1,617    5.14  

Governments and official institutions

     12,758      281    2.94         16,529      620    5.01  

Time, savings and other

     52,211      1,220    3.12         40,587      1,246    4.10  
                                    

Total foreign interest-bearing deposits

     101,370      2,439    3.21         99,141      3,483    4.70  
                                    

Total interest-bearing deposits

     621,863      11,954    2.57         522,869      12,840    3.28  
                                    

Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings

     454,355      10,452    3.07         414,126      16,369    5.28  

Trading account liabilities

     76,752      2,250    3.92         83,132      2,619    4.21  

Long-term debt

     223,017      7,172    4.29         160,895      6,721    5.57  
                                    

Total interest-bearing liabilities (6)

     1,375,987      31,828    3.09         1,181,022      38,549    4.36  
                                          

Noninterest-bearing sources:

                    

Noninterest-bearing deposits

     188,800               172,596      

Other liabilities

     83,088               67,264      

Shareholders’ equity

     160,890               133,878      
                                          

Total liabilities and shareholders’ equity

       $ 1,808,765                 $ 1,554,760      
                                          

Net interest spread

         2.52    %          2.05 %

Impact of noninterest-bearing sources

         0.34             0.55  
                                          

Net interest income/yield on earning assets

          $ 33,148    2.86    %           $ 26,375    2.60 %
                                          

 

 

(1) Yields on AFS debt securities are calculated based on fair value rather than historical cost balances. The use of fair value does not have a material impact on net interest yield.
(2) Nonperforming loans are included in the respective average loan balances. Income on these nonperforming loans is recognized on a cash basis.
(3) Includes foreign consumer loans of $3.0 billion and $3.9 billion for the nine months ended September 30, 2008 and 2007.
(4) Includes consumer finance loans of $2.8 billion and $3.2 billion, and other foreign consumer loans of $947 million and $1.2 billion for the nine months ended September 30, 2008 and 2007.
(5) Includes domestic commercial real estate loans of $61.6 billion and $36.6 billion for the nine months ended September 30, 2008 and 2007.
(6) Interest income includes the impact of interest rate risk management contracts, which decreased interest income on the underlying assets $219 million and $408 million for the nine months ended September 30, 2008 and 2007. Interest expense includes the impact of interest rate risk management contracts, which increased interest expense on the underlying liabilities $172 million and $612 million for the nine months ended September 30, 2008 and 2007.

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  10


Bank of America Corporation and Subsidiaries

Year-to-Date Average Balances and Interest Rates - Fully Taxable-equivalent Basis - Isolating Hedge Income/Expense (1)

 

(Dollars in millions)

 

     Nine Months Ended September 30      
     2008    2007      
     Average
Balance
   Interest
Income/
Expense
    Yield/
Rate
         Average
Balance
   Interest
Income/
Expense
    Yield/
Rate
     

Earning assets

                   

Time deposits placed and other short-term investments (2) 

       $ 10,758        $ 294     3.65     %        $ 14,059        $ 546     5.19     %

Federal funds sold and securities purchased under agreements to resell (2) 

     135,846      3,093     3.04          157,139      6,277     5.33    

Trading account assets

     189,579      7,089     4.99          186,137      7,325     5.25    

Debt securities (2)

     240,347      9,474     5.26          179,589      7,241     5.38    

Loans and leases:

                   

Residential mortgage

     262,478      11,090     5.63          260,469      11,140     5.70    

Home equity

     129,402      5,623     5.80          94,179      5,342     7.58    

Discontinued real estate

     7,397      399     7.25          —        —       —      

Credit card - domestic

     62,784      5,059     10.76          57,148      5,444     12.74    

Credit card - foreign

     16,297      1,521     12.47          11,694      1,038     11.86    

Direct/Indirect consumer

     82,242      5,220     8.48          68,281      4,344     8.51    

Other consumer

     3,908      251     8.58          4,614      318     9.21    

Total consumer

     564,508      29,163     6.90          496,385      27,626     7.43    

Commercial - domestic (2) 

     218,702      8,840     5.40          168,948      9,201     7.28    

Commercial real estate

     62,746      2,351     5.00          37,305      2,092     7.50    

Commercial lease financing

     22,364      557     3.32          19,828      638     4.29    

Commercial - foreign (2)

     32,254      1,130     4.68          22,696      1,025     6.04    

Total commercial

     336,066      12,878     5.12          248,777      12,956     6.96    

Total loans and leases

     900,574      42,041     6.21          745,162      40,582     7.28    

Other earning assets (2)

     67,513      3,204     6.33          70,091      3,361     6.41    

Total earning assets - excluding hedge impact

     1,544,617      65,195     5.62          1,352,177      65,332     6.45    

Net hedge income (expense) on assets

            (219 )                 (408 )    

Total earning assets - including hedge impact

     1,544,617      64,976     5.61          1,352,177      64,924     6.41    

Cash and cash equivalents

     34,598             32,881       

Other assets, less allowance for loan and lease losses

     229,550                       169,702                 

Total assets

       $ 1,808,765                         $ 1,554,760                 

Interest-bearing liabilities

                   

Domestic interest-bearing deposits:

                   

Savings

       $ 32,419        $ 172     0.71     %        $ 32,436        $ 138     0.57     %

NOW and money market deposit accounts (2) 

     261,918      2,958     1.51          213,230      3,013     1.89    

Consumer CDs and IRAs (2)

     195,318      5,250     3.59          162,372      5,134     4.23    

Negotiable CDs, public funds and other time deposits (2) 

     30,838      799     3.46          15,690      547     4.67    

Total domestic interest-bearing deposits

     520,493      9,179     2.36          423,728      8,832     2.79    

Foreign interest-bearing deposits:

                   

Banks located in foreign countries (2) 

     36,401      949     3.48          42,025      1,615     5.14    

Governments and official institutions

     12,758      281     2.94          16,529      620     5.01    

Time, savings and other

     52,211      1,220     3.12          40,587      1,246     4.10    

Total foreign interest-bearing deposits

     101,370      2,450     3.23          99,141      3,481     4.69    

Total interest-bearing deposits

     621,863      11,629     2.50          522,869      12,313     3.15    

Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings (2) 

     454,355      10,052     2.95          414,126      16,671     5.38    

Trading account liabilities

     76,752      2,250     3.92          83,132      2,619     4.21    

Long-term debt (2) 

     223,017      7,725     4.62          160,895      6,334     5.25    

Total interest-bearing liabilities - excluding hedge impact

     1,375,987      31,656     3.07          1,181,022      37,937     4.29    

Net hedge (income) expense on liabilities

            172                   612      

Total interest-bearing liabilities - including hedge impact

     1,375,987      31,828     3.09          1,181,022      38,549     4.36    

Noninterest-bearing sources:

                   

Noninterest-bearing deposits

     188,800             172,596       

Other liabilities

     83,088             67,264       

Shareholders’ equity

     160,890                       133,878                 

Total liabilities and shareholders’ equity

       $ 1,808,765                         $ 1,554,760                 

Net interest spread

        2.55             2.16    

Impact of noninterest-bearing sources

                  0.34                       0.54    

Net interest income/yield on earning assets - excluding hedge impact

              $ 33,539     2.89     %               $ 27,395     2.70     %

Net impact of hedge income (expense)

            (391 )   (0.03 )               (1,020 )   (0.10 )  

Net interest income/yield on earning assets

              $ 33,148     2.86     %               $ 26,375     2.60     %

 

 

(1) This table presents a non-GAAP financial measure. The impact of interest rate risk management derivatives is shown separately. Interest income and interest expense amounts, and the yields and rates have been adjusted. Management believes this presentation is useful to investors because it adjusts for the impact of our hedging decisions and provides a better understanding of our hedging activities. The impact of interest rate risk management derivatives is not material to the average balances presented above.
(2) The following presents the impact of interest rate risk management derivatives on interest income and interest expense.

Interest income excludes the impact of interest rate risk management contracts, which increased (decreased) interest income on:

 

     Nine Months Ended September 30      
     2008     2007      

Time deposits placed and other short-term investments

                       $ (12 )                       $ (41 )  

Federal funds sold and securities purchased under agreements to resell

     (173 )     (303 )  

Debt securities

     (4 )     (16 )  

Commercial - domestic

     (28 )     (21 )  

Commercial - foreign

     —         1    

Other earning assets

     (2 )     (28 )  
                  

Net hedge income (expense) on assets

                       $ (219 )                       $ (408 )  
                  

Interest expense excludes the impact of interest rate risk management contracts, which increased (decreased) interest expense on:

NOW and money market deposit accounts

                       $ 10                         $ 14    

Consumer CDs and IRAs

     319       504    

Negotiable CDs, public funds and other time deposits

     7       7    

Banks located in foreign countries

     (11 )     2    

Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings

     400       (302 )  

Long-term debt

     (553 )     387    
                  

Net hedge (income) expense on liabilities

                       $ 172                         $ 612    
                  

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  11


Bank of America Corporation and Subsidiaries

Business Segment View

 

LOGO

 

 

(1) Fully taxable-equivalent basis
(2) Global Consumer and Small Business Banking is presented on a managed basis, specifically Card Services, with a corresponding offset to All Other.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  12


Bank of America Corporation and Subsidiaries

Global Consumer and Small Business Banking Segment Results (1, 2)

 

(Dollars in millions; except as noted)

 

     Nine Months Ended
September 30
         Third
Quarter

2008
        Second
Quarter

2008
        First
Quarter

2008
        Fourth
Quarter

2007
        Third
Quarter

2007
    
     2008         2007                                    

Net interest income (3)

       $ 24,636           $ 21,378             $ 8,938           $ 8,018           $ 7,680           $ 7,444           $ 7,257   

Noninterest income:

                                           

Card income

     7,583         7,567           2,296         2,560         2,727         2,627         2,588   

Service charges

     5,130         4,385           1,822         1,743         1,565         1,623         1,519   

Mortgage banking income

     2,820         842           1,756         409         655         490         243   

Insurance premiums

     1,203         662           709         253         241         250         266   

All other income

     1,120         497           408         208         504         200         202   
                                                                       

Total noninterest income

     17,856         13,953           6,991         5,173         5,692         5,190         4,818   
                                                                       

Total revenue, net of interest expense

     42,492         35,331           15,929         13,191         13,372         12,634         12,075   
 

Provision for credit losses (4)

     19,655         8,626           6,655         6,545         6,455         4,296         3,122   

Noninterest expense

     17,820         14,793           7,275         5,363         5,182         5,578         5,281   
                                                                       

Income before income taxes

     5,017         11,912           1,999         1,283         1,735         2,760         3,672   

Income tax expense (3)

     1,849         4,393           765         452         632         862         1,359   
                                                                       

Net income

       $ 3,168           $ 7,519             $ 1,234           $ 831           $ 1,103           $ 1,898           $ 2,313   
                                                                       
 

Net interest yield (3)

     8.41    %        8.11    %        8.28    %        8.52    %        8.32    %        7.92    %        8.20    %  

Return on average equity

     5.98         16.26           6.19         5.00         6.72         11.23         14.74   

Efficiency ratio (3)

     41.94         41.87           45.68         40.66         38.75         44.15         43.74   
 

Balance sheet (2)

                                           
 

Average

                                           

Total loans and leases

       $ 374,494           $ 319,123             $ 393,373           $ 367,839           $ 362,062           $ 352,167           $ 331,674   

Total earning assets (5)

     391,432         352,239           429,440         378,278         371,227         372,902         351,218   

Total assets (5)

     457,419         403,705           509,139         436,643         430,996         428,324         401,004   

Total deposits

     362,387         326,528           397,073         344,061         345,647         342,926         323,282   

Allocated equity

     70,747         61,837           79,261         66,872         66,015         67,031         62,264   
 

Period end

                                           

Total loans and leases

       $ 392,219           $ 337,792             $ 392,219           $ 364,608           $ 363,355           $ 359,008           $ 337,792   

Total earning assets (5)

     445,682         355,389           445,682         375,421         379,988         381,205         355,389   

Total assets (5)

     506,154         402,773           506,154         429,441         439,732         445,246         402,773   

Total deposits

     400,122         322,697           400,122         341,924         352,058         346,908         322,697   
 

Period end (in billions)

                                           

Mortgage servicing portfolio (6)

       $ 2,012.1           $ 483.5             $ 2,012.1           $ 540.8           $ 529.7           $ 516.9           $ 483.5   

 

 

(1) Global Consumer and Small Business Banking has three primary businesses: Deposits and Student Lending, Card Services, and Mortgage, Home Equity and Insurance Services. Deposits and Student Lending includes the results of ALM activities.
(2) Presented on a managed basis, specifically Card Services. (See Exhibit A: Non-GAAP Reconciliations - Global Consumer and Small Business Banking - Reconciliation on page 46).
(3) Fully taxable-equivalent basis
(4) Represents provision for credit losses on held loans combined with realized credit losses associated with the securitized loan portfolio.
(5) Total earning assets and total assets include asset allocations to match liabilities (i.e., deposits).
(6) Servicing of residential, home equity and discontinued real estate mortgage loans.

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  13


Bank of America Corporation and Subsidiaries

Global Consumer and Small Business Banking Business Results

 

(Dollars in millions)

 

     Three Months Ended September 30, 2008      
     Total (1)         Deposits and
Student Lending (2)
        Card
Services (1)
         Mortgage, Home Equity
and Insurance Services
     

Net interest income (3)

   $    8,938         $    2,997       $     4,831        $   1,110    

Noninterest income:

                       

Card income

   2,296         616       1,679        1    

Service charges

   1,822         1,821       —          1    

Mortgage banking income

   1,756         —         —          1,756    

Insurance premiums

   709         —         139        570    

All other income

   408         8       394        6    
                                   

Total noninterest income

   6,991         2,445       2,212        2,334    
                                   

Total revenue, net of interest expense

   15,929         5,442       7,043        3,444    
 

Provision for credit losses (4)

   6,655         239       5,462        954    

Noninterest expense

   7,275         2,362       2,161        2,752    
                                   

Income (loss) before income taxes

   1,999         2,841       (580 )      (262 )  

Income tax expense (benefit) (3)

   765         1,072       (207 )      (100 )  
                                   

Net income (loss)

   $    1,234         $    1,769       $      (373 )      $     (162 )  
                                   
 

Net interest yield (3)

   8.28    %     3.20    %    8.25     %    2.57     %

Return on average equity

   6.19         35.87       (3.57 )      (3.57 )  

Efficiency ratio (3)

   45.68         43.41       30.68        79.92    

Average - total loans and leases

   $393,373         n/m       $232,578        $145,561    

Average - total deposits

   397,073         $379,298       n/m        n/m    

Period end - total assets (5)

   506,154         397,801       253,671        203,936    
     Three Months Ended June 30, 2008      
     Total (1)         Deposits and
Student Lending (2)
        Card
Services (1)
         Mortgage, Home Equity
and Insurance Services
     

Net interest income (3)

   $    8,018         $    2,696       $    4,650        $       672    

Noninterest income:

                       

Card income

   2,560         618       1,941        1    

Service charges

   1,743         1,742       —          1    

Mortgage banking income

   409         —         —          409    

Insurance premiums

   253         —         141        112    

All other income

   208         31       60        117    
                                   

Total noninterest income

   5,173         2,391       2,142        640    
                                   

Total revenue, net of interest expense

   13,191         5,087       6,792        1,312    
 

Provision for credit losses (4)

   6,545         283       4,065        2,197    

Noninterest expense

   5,363         2,523       2,114        726    
                                   

Income (loss) before income taxes

   1,283         2,281       613        (1,611 )  

Income tax expense (benefit) (3)

   452         828       190        (566 )  
                                   

Net income (loss)

   $       831         $    1,453       $       423        $   (1,045 )  
                                   
 

Net interest yield (3)

   8.52       3.24    %    8.06     %    2.05     %

Return on average equity

   5.00         29.08       4.10        (80.03 )  

Efficiency ratio (3)

   40.66         49.59       31.12        55.35    

Average - total loans and leases

   $367,839         n/m       $231,492        $121,545    

Average - total deposits

   344,061         $337,485       n/m        n/m    

Period end - total assets (5)

   429,441         361,367       259,986        129,765    
     Three Months Ended September 30, 2007      
     Total (1)         Deposits and
Student Lending (2)
        Card
Services (1)
         Mortgage, Home Equity
and Insurance Services
     

Net interest income (3)

   $    7,257         $    2,563       $    4,128        $       566    

Noninterest income:

                       

Card income

   2,588         551       2,035        2    

Service charges

   1,519         1,518       —          1    

Mortgage banking income

   243         —         —          243    

Insurance premiums

   266         —         179        87    

All other income

   202         37       139        26    
                                   

Total noninterest income

   4,818         2,106       2,353        359    
                                   

Total revenue, net of interest expense

   12,075         4,669       6,481        925    
 

Provision for credit losses (4)

   3,122         184       2,741        197    

Noninterest expense

   5,281         2,480       2,113        688    
                                   

Income before income taxes

   3,672         2,005       1,627        40    

Income tax expense (3)

   1,359         759       590        10    
                                   

Net income

   $    2,313         $    1,246       $    1,037        $30    
                                   
 

Net interest yield (3)

   8.20    %    3.14    %    7.77     %    1.94     %

Return on average equity

   14.74         26.93       10.39        2.74    

Efficiency ratio (3)

   43.74         53.11       32.61        74.40    

Average - total loans and leases

   $331,674         n/m       $210,168        $108,571    

Average - total deposits

   323,282         $317,128       n/m        n/m    

Period end - total assets (5)

   402,773         341,615       243,988        124,069    

 

 

(1) Presented on a managed basis, specifically Card Services.
(2) For the three months ended September 30, 2008, June 30, 2008 and September 30, 2007, a total of $3.3 billion, $5.6 billion and $2.6 billion of deposits were migrated from Global Consumer and Small Business Banking to Global Wealth and Investment Management.
(3) Fully taxable-equivalent basis
(4) Represents provision for credit losses on held loans combined with realized credit losses associated with the securitized loan portfolio.
(5) Total assets include asset allocations to match liabilities (i.e., deposits).

n/m = not meaningful

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  14


Bank of America Corporation and Subsidiaries

Global Consumer and Small Business Banking Business Results

 

(Dollars in millions)

 

     Nine Months Ended September 30, 2008      
     Total (1)         Deposits and
Student Lending (2)
        Card
Services (1)
         Mortgage, Home Equity
and Insurance Services
     

Net interest income (3)

   $  24,636         $    8,258       $  13,977        $     2,401    

Noninterest income:

                       

Card income

   7,583         1,795       5,783        5    

Service charges

   5,130         5,127       —          3    

Mortgage banking income

   2,820         —         —          2,820    

Insurance premiums

   1,203         —         432        771    

All other income

   1,120         47       924        149    
                                   

Total noninterest income

   17,856         6,969       7,139        3,748    
                                   

Total revenue, net of interest expense

   42,492         15,227       21,116        6,149    
 

Provision for credit losses (4)

   19,655         772       13,834        5,049    

Noninterest expense

   17,820         7,409       6,198        4,213    
                                   

Income (loss) before income taxes

   5,017         7,046       1,084        (3,113 )  

Income tax expense (benefit) (3)

   1,849         2,608       359        (1,118 )  
                                   

Net income (loss)

   $    3,168         $    4,438       $       725        $   (1,995 )  
                                   
 

Net interest yield (3)

   8.41    %     3.17    %    8.09     %    2.23     %

Return on average equity

   5.98         29.56       2.34        (28.53 )  

Efficiency ratio (3)

   41.94         48.66       29.35        68.53    

Average - total loans and leases

   $374,494         n/m       $230,423        $129,106    

Average - total deposits

   362,387         $352,258       n/m        n/m    

Period end - total assets (5)

   506,154         397,801       253,671        203,936    
     Nine Months Ended September 30, 2007      
     Total (1)         Deposits and
Student Lending (2)
        Card
Services (1)
         Mortgage, Home Equity
and Insurance Services
     

Net interest income (3)

   $  21,378         $    7,768       $  11,996        $    1,614    

Noninterest income:

                       

Card income

   7,567         1,590       5,972        5    

Service charges

   4,385         4,382       (1 )      4    

Mortgage banking income

   842         —         —          842    

Insurance premiums

   662         —         411        251    

All other income

   497         88       348        61    
                                   

Total noninterest income

   13,953         6,060       6,730        1,163    
                                   

Total revenue, net of interest expense

   35,331         13,828       18,726        2,777    
 

Provision for credit losses (4)

   8,626         380       7,891        355    

Noninterest expense

   14,793         6,989       5,968        1,836    
                                   

Income before income taxes

   11,912         6,459       4,867        586    

Income tax expense (3)

   4,393         2,404       1,775        214    
                                   

Net income

   $    7,519         $    4,055       $    3,092        $       372    
                                   
 

Net interest yield (3)

   8.11       3.18    %    7.83     %    2.00     %

Return on average equity

   16.26         28.82       10.57        12.66    

Efficiency ratio (3)

   41.87         50.55       31.87        66.09    

Average - total loans and leases

   $319,123         n/m       $204,209        $102,042    

Average - total deposits

   326,528         $320,515       n/m        n/m    

Period end - total assets (5)

   402,773         341,615       243,988        124,069    

 

 

(1) Presented on a managed basis, specifically Card Services.
(2) For the nine months ended September 30, 2008 and 2007, a total of $15.9 billion and $9.0 billion of deposits were migrated from Global Consumer and Small Business Banking to Global Wealth and Investment Management.
(3) Fully taxable-equivalent basis
(4) Represents provision for credit losses on held loans combined with realized credit losses associated with the securitized loan portfolio.
(5) Total assets include asset allocations to match liabilities (i.e., deposits).

n/m = not meaningful

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  15


Bank of America Corporation and Subsidiaries

Global Consumer and Small Business Banking - Key Indicators

 

(Dollars in millions; except as noted)

 

     Nine Months Ended
September 30
          Third
Quarter

2008
         Second
Quarter

2008
         First
Quarter

2008
         Fourth
Quarter

2007
         Third
Quarter

2007
     
     2008          2007                             

Deposits and Student Lending Key Indicators

                                    

Average deposit balances

                                    

Checking

   $ 126,621        $ 125,003          $ 125,823        $ 128,221        $ 125,829        $ 124,811        $ 122,653    

Savings

     29,437          29,461            29,392          30,092          28,828          28,959          28,566    

MMS

     72,195          62,620            80,362          69,771          66,360          64,722          60,991    

CD’s & IRA’s

     120,686          100,221            139,808          106,215          115,824          115,117          101,418    

Foreign and other

     2,526          2,487            3,117          2,394          2,063          3,002          2,712    
                                                                              

Total average deposit balances

   $ 351,465        $ 319,792          $ 378,502        $ 336,693        $ 338,904        $ 336,611        $ 316,340    
                                                                              

Total balances migrated to
Premier Banking and Investments

   $ 15,934        $ 8,968          $ 3,272        $ 5,631        $ 7,031        $ 2,443        $ 2,560    
 

Deposit spreads (excludes noninterest costs)

                                    

Checking

     4.22     %      4.27     %        4.23     %      4.15     %      4.29     %      4.31     %      4.30     %

Savings

     3.80          3.73            3.80          3.70          3.89          3.77          3.71    

MMS

     1.39          3.41            1.15          1.30          1.54          2.83          3.43    

CD’s & IRA’s

     0.43          1.10            0.14          0.40          0.53          0.89          1.06    

Foreign and other

     4.48          4.33            4.52          4.47          4.44          4.38          4.32    

Total deposit spreads

     2.34          3.04            2.01          2.31          2.41          2.79          3.02    
 

Net new retail checking (units in thousands)

     2,054          1,961            823          674          557          343          757    
 

Debit purchase volumes

   $ 157,603        $ 138,320          $ 53,263        $ 54,274        $ 50,066        $ 51,133        $ 47,329    
 

Online banking (end of period)

                                    

Active accounts (units in thousands)

     28,636          23,057            28,636          25,299          24,949          23,791          23,057    

Active billpay accounts (units in thousands)

     15,732          11,928            15,732          13,269          13,081          12,552          11,928    
 

Card Services Key Indicators

                                    

Managed credit card data (1)

                                    

Gross interest yield

     11.63     %      12.73     %        11.52     %      11.44     %      11.94     %      12.48     %      12.74     %

Risk adjusted margin (1)

     6.69          7.68            6.75          6.39          6.92          7.74          7.95    

Loss rates

     5.85          4.81            6.40          5.96          5.19          4.75          4.67    

Average outstandings

   $ 185,258        $ 169,005          $ 186,408        $ 185,659        $ 183,694        $ 178,411        $ 172,002    

Ending outstandings

     183,398          173,770            183,398          187,162          183,758          183,691          173,770    

New account growth (in thousands)

     7,051          8,260            1,766          2,670          2,615          3,509          2,895    

Purchase volumes

   $ 186,940        $ 183,965          $ 62,662        $ 64,457        $ 59,821        $ 68,380        $ 63,494    

Delinquencies:

                                    

30 Day

     5.89     %      5.24     %        5.89     %      5.53     %      5.61     %      5.45     %      5.24     %

90 Day

     2.88          2.48            2.88          2.82          2.83          2.66          2.48    
 

Mortgage, Home Equity and Insurance Services Key Indicators

                                    

Mortgage servicing rights at fair value rollforward:

                                    

Beginning balance

   $ 3,053        $ 2,869          $ 4,250        $ 3,163        $ 3,053        $ 3,179        $ 3,269    

Countrywide balance, July 1, 2008

     17,188          —              17,188          —            —            —            —      

Additions

     1,910          539            875          669          366          253          271    

Impact of customer payments

     (1,855 )        (554 )          (1,425 )        (233 )        (197 )        (212 )        (187 )  

Other changes in MSR

     515          325            (77 )        651          (59 )        (167 )        (174 )  
                                                                              

Ending balance

   $ 20,811        $ 3,179          $ 20,811        $ 4,250        $ 3,163        $ 3,053        $ 3,179    
                                                                              

Capitalized mortgage servicing rights (% of loans serviced)

     126     bps      130     bps        126     bps      145     bps      118     bps      118     bps      130     bps

Mortgage loans serviced for investors (in billions)

   $ 1,654        $ 245          $ 1,654        $ 292        $ 268        $ 259        $ 245    
 

Global Consumer and Small Business Banking

                                    

Mortgage production

   $ 86,184        $ 70,934          $ 49,625        $ 18,515        $ 18,044        $ 22,370        $ 24,533    

Home equity production

     28,078          53,224            5,260          8,997          13,821          16,001          17,352    
 

Total Corporation

                                    

Mortgage production

     95,899          79,551            51,539          22,438          21,922          24,834          26,930    

Home equity production

     35,164          64,884            7,023          11,500          16,641          19,299          21,105    

 

 

 

(1) Credit Card includes U.S. Consumer Card, foreign and U.S. Government card. Does not include Business Credit Card.

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  16


Bank of America Corporation and Subsidiaries

E-Commerce & BankofAmerica.com

 

Bank of America has the largest active online banking customer base with 28.6 million subscribers.

Bank of America uses a strict Active User standard—customers must have used our online services within the last 90 days.

15.7 million active bill pay users paid $83.4 billion worth of bills this quarter. The number of customers who sign up and use Bank of America’s Bill Pay Service continues to far surpass that of any other financial institution.

Currently, approximately 407 companies are presenting 38.0 million e-bills per quarter.

LOGO

Certain prior period amounts have been reclassified to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  17


Bank of America Corporation and Subsidiaries

Credit Card Data (1) 

 

(Dollars in millions)

 

     Nine Months Ended
September 30
          Third
Quarter

2008
        Second
Quarter

2008
        First
Quarter

2008
        Fourth
Quarter

2007
        Third
Quarter

2007
     
     2008         2007                                    

Loans

                                         

Period end

                                         

Held credit card outstandings

   $ 81,350       $ 71,702          $ 81,350       $ 78,642       $ 75,911       $ 80,724       $ 71,702    

Securitization impact

     102,048         102,068            102,048         108,520         107,847         102,967         102,068    
                                                                         

Managed credit card outstandings

   $ 183,398       $ 173,770          $ 183,398       $ 187,162       $ 183,758       $ 183,691       $ 173,770    
                                                                         

Average

                                         

Held credit card outstandings

   $ 79,081       $ 68,842          $ 80,489       $ 78,221       $ 78,518       $ 74,392       $ 69,486    

Securitization impact

     106,177         100,163            105,919         107,438         105,176         104,019         102,516    
                                                                         

Managed credit card outstandings

   $ 185,258       $ 169,005          $ 186,408       $ 185,659       $ 183,694       $ 178,411       $ 172,002    
                                                                         
                                         

Credit Quality

                                         

Charge-Offs $

                                         

Held net charge-offs

   $ 3,306       $ 2,595          $ 1,242       $ 1,108       $ 956       $ 846       $ 808    

Securitization impact

     4,813         3,481            1,754         1,643         1,416         1,292         1,216    
                                                                         

Managed credit card net losses

   $ 8,119       $ 6,076          $ 2,996       $ 2,751       $ 2,372       $ 2,138       $ 2,024    
                                                                         

Charge-Offs %

                                         

Held net charge-offs

     5.58    %        5.04     %        6.14    %        5.69    %        4.90    %        4.51    %        4.61     %  

Securitization impact

     0.27         (0.23 )          0.26         0.27         0.29         0.24         0.06    
                                                                         

Managed credit card net losses

     5.85    %        4.81     %        6.40    %        5.96    %        5.19    %        4.75    %        4.67     %  
                                                                         

30+ Delinquency $

                                         

Held delinquency

   $ 4,675       $ 3,727          $ 4,675       $ 4,121       $ 4,017       $ 4,298       $ 3,727    

Securitization impact

     6,126         5,381            6,126         6,226         6,288         5,710         5,381    
                                                                         

Managed delinquency

   $ 10,801       $ 9,108          $ 10,801       $ 10,347       $ 10,305       $ 10,008       $ 9,108    
                                                                         

30+ Delinquency %

                                         

Held delinquency

     5.75    %        5.20     %        5.75    %        5.24    %        5.29    %        5.32    %        5.20     %  

Securitization impact

     0.14         0.04            0.14         0.29         0.32         0.13         0.04    
                                                                         

Managed delinquency

     5.89    %        5.24     %        5.89    %        5.53    %        5.61    %        5.45    %        5.24     %  
                                                                         

90+ Delinquency $

                                         

Held delinquency

   $ 2,330       $ 1,788          $ 2,330       $ 2,109       $ 2,055       $ 2,127       $ 1,788    

Securitization impact

     2,958         2,514            2,958         3,169         3,137         2,757         2,514    
                                                                         

Managed delinquency

   $ 5,288       $ 4,302          $ 5,288       $ 5,278       $ 5,192       $ 4,884       $ 4,302    
                                                                         

90+ Delinquency %

                                         

Held delinquency

     2.87    %        2.49     %        2.87    %        2.68    %      2.71    %      2.63    %      2.49     %

Securitization impact

     0.01         (0.01 )          0.01         0.14         0.12         0.03         (0.01 )  
                                                                         

Managed delinquency

     2.88    %        2.48     %        2.88    %        2.82    %      2.83    %      2.66    %      2.48     %
                                                                         

 

 

 

(1) Credit Card includes U.S. Consumer Card, foreign and U.S. Government card. Does not include Business Credit Card.

Certain prior period amounts have been reclassified to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  18


Bank of America Corporation and Subsidiaries

Mass Market Small Business Banking Results: Relationship View

 

(Dollars in millions)

 

     Three Months Ended September 30, 2008 (1)
     Total         Global Consumer and
Small Business Banking
   Other (2)

Net interest income (3)

   $   953         $   933    $20

Noninterest income

   642         568    74
                   

Total revenue, net of interest expense

   1,595         1,501    94
 

Provision for credit losses

   729         717    12

Noninterest expense

   550         505    45
                   

Income before income taxes

   316         279    37

Income tax expense (3) 

   117         104    13
                   

Net income

   $   199         $   175    $24
                   
     Three Months Ended June 30, 2008 (1)
     Total         Global Consumer and
Small Business Banking
   Other (2)

Net interest income (3)

   $   935         $   916    $19

Noninterest income

   647         569    78
                   

Total revenue, net of interest expense

   1,582         1,485    97
 

Provision for credit losses

   608         598    10

Noninterest expense

   552         501    51
                   

Income before income taxes

   422         386    36

Income tax expense (3) 

   156         142    14
                   

Net income

   $   266         $   244    $22
                   
     Three Months Ended September 30, 2007
     Total         Global Consumer and
Small Business Banking
   Other (2)

Net interest income (3)

   $   898         $   882    $16

Noninterest income

   593         517    76
                   

Total revenue, net of interest expense

   1,491         1,399    92
 

Provision for credit losses

   532         527    5

Noninterest expense

   505         473    32
                   

Income before income taxes

   454         399    55

Income tax expense (3) 

   169         148    21
                   

Net income

   $   285         $   251    $34
                   

 

 

(1) Includes Small Business and Business Banking results of LaSalle Bank Corporation beginning on October 1, 2007.
(2) Includes Mass Market Small Business Banking results within Global Corporate and Investment Banking and Global Wealth and Investment Management.
(3) Fully taxable-equivalent basis

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  19


Bank of America Corporation and Subsidiaries

Mass Market Small Business Banking Results: Relationship View

 

(Dollars in millions)

 

     Nine Months Ended September 30, 2008 (1)
     Total         Global Consumer and
Small Business Banking
   Other (2)

Net interest income (3)

   $2,815         $2,758    $  57

Noninterest income

   1,887         1,662    225
                   

Total revenue, net of interest expense

   4,702         4,420    282
 

Provision for credit losses

   2,441         2,409    32

Noninterest expense

   1,647         1,501    146
                   

Income before income taxes

   614         510    104

Income tax expense (3) 

   227         189    38
                   

Net income

   $   387         $   321    $  66
                   
     Nine Months Ended September 30, 2007
     Total         Global Consumer and
Small Business Banking
   Other (2)

Net interest income (3)

   $2,601         $2,556    $  45

Noninterest income

   1,709         1,488    221
                   

Total revenue, net of interest expense

   4,310         4,044    266
 

Provision for credit losses

   1,312         1,296    16

Noninterest expense

   1,511         1,378    133
                   

Income before income taxes

   1,487         1,370    117

Income tax expense (3) 

   549         507    42
                   

Net income

   $   938         $   863    $  75
                   

 

 

(1) Includes Small Business and Business Banking results of LaSalle Bank Corporation beginning on October 1, 2007.
(2) Includes Mass Market Small Business Banking results within Global Corporate and Investment Banking and Global Wealth and Investment Management.
(3) Fully taxable-equivalent basis

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  20


Bank of America Corporation and Subsidiaries

Global Corporate and Investment Banking Segment Results (1)

 

(Dollars in millions)

 

     Nine Months Ended
September 30
        Third
Quarter
2008
         Second
Quarter
2008
         First
Quarter
2008
         Fourth
Quarter
2007
         Third
Quarter
2007
     
     2008          2007                           

Net interest income (2)

   $  11,540        $    7,709        $    4,124        $    3,822        $    3,594        $    3,417        $    2,713    

Noninterest income:

                                    

Service charges

   2,503        2,010        858        856        789        761        673    

Investment and brokerage services

   674        690        218        211        245        223        236    

Investment banking income

   1,922        1,960        491        766        665        576        436    

Trading account profits (losses)

   (1,814 )      456        (393 )      369        (1,790 )      (5,376 )      (1,376 )  

All other income (loss)

   (1,169 )      1,460        (761 )      (68 )      (340 )      (315 )      237    
                                                              

Total noninterest income

   2,116        6,576        413        2,134        (431 )      (4,131 )      206    
                                                              

Total revenue, net of interest expense

   13,656        14,285        4,537        5,956        3,163        (714 )      2,919    
 

Provision for credit losses

   1,665        384        779        361        525        274        227    

Noninterest expense

   8,152        8,746        2,907        2,793        2,452        3,452        2,538    
                                                              

Income (loss) before income taxes

   3,839        5,155        851        2,802        186        (4,440 )      154    

Income tax expense (benefit) (2)

   1,441        1,914        318        1,053        70        (1,657 )      64    
                                                              

Net income (loss)

   $    2,398        $    3,241        $      533        $    1,749        $      116        $  (2,783 )      $        90    
                                                              
 

Net interest yield (2)

   2.17     %    1.56   %      2.31     %    2.19     %    2.00     %    1.88     %    1.62     %

Return on average equity

   5.29        10.19        3.43        11.59        0.79        (20.61 )      0.81    

Efficiency ratio (2)

   59.69        61.23        64.07        46.90        77.51        n/m        86.96    
 

Balance sheet

                                    
 

Average

                                    

Total loans and leases

   $335,328        $256,899        $342,494        $336,328        $327,083        $327,622        $268,294    

Total trading-related assets

   349,683        364,843        350,063        337,058        361,923        354,336        356,867    

Total market-based earning assets (3)

   385,517        414,363        377,630        375,274        403,733        407,315        407,066    

Total earning assets (4)

   710,997        662,599        710,004        701,834        721,165        720,587        663,720    

Total assets (4)

   824,788        752,860        821,444        816,065        836,895        825,697        758,281    

Total deposits

   235,671        214,553        237,935        233,788        235,264        235,730        216,715    

Allocated equity

   60,499        42,529        61,792        60,718        58,973        53,558        44,027    
 

Period end

                                    

Total loans and leases

   $339,645        $276,143        $339,645        $346,046        $328,083        $326,042        $276,143    

Total trading-related assets

   277,442        333,107        277,442        303,423        317,256        308,316        333,107    

Total market-based earning assets (3)

   289,918        375,100        289,918        335,207        347,877        360,276        375,100    

Total earning assets (4)

   633,976        637,512        633,976        669,774        671,279        675,407        637,512    

Total assets (4)

   753,495        739,427        753,495        780,504        793,993        778,158        739,427    

Total deposits

   244,304        210,656        244,304        227,993        233,220        246,242        210,656    

 

 

(1) Global Corporate and Investment Banking has three primary businesses: Business Lending, Capital Markets and Advisory Services, and Treasury Services. In addition, ALM/Other includes the results of ALM activities and other Global Corporate and Investment Banking activities.
(2) Fully taxable-equivalent basis
(3) Total market-based earning assets represents earning assets included in the Capital Markets and Advisory Services business but excludes loans that are accounted for at fair value in accordance with SFAS 159.
(4) Total earning assets and total assets include asset allocations to match liabilities (i.e., deposits).
n/m = not meaningful

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  21


Bank of America Corporation and Subsidiaries

Global Corporate and Investment Banking Business Results

 

(Dollars in millions)

 

     Three Months Ended September 30, 2008  
     Total          Business
Lending
         Capital Markets
and Advisory
Services (1)
         Treasury
Services
         ALM/
Other
 

Net interest income (2)

   $ 4,124          $ 1,542        $    1,471        $ 912        $ 199  

Noninterest income:

                        

Service charges

     858            171        37          650          —    

Investment and brokerage services

     218            —          209          9          —    

Investment banking income

     491            —          491          —            —    

Trading account profits (losses)

     (393 )          40        (450 )        19          (2 )

All other income (loss)

     (761 )          176        (1,486 )        295          254  
                                                    

Total noninterest income

     413            387        (1,199 )        973          252  
                                                    

Total revenue, net of interest expense

     4,537            1,929        272          1,885          451  
 

Provision for credit losses

     779            780        33          19          (53 )

Noninterest expense

     2,907            546        1,340          982          39  
                                                    

Income (loss) before income taxes

     851            603        (1,101 )        884          465  

Income tax expense (benefit) (2)

     318            229        (408 )        327          170  
                                                    

Net income (loss)

   $ 533          $ 374        $    (693 )      $ 557        $ 295  
                                                    

Net interest yield (2)

     2.31     %        1.93     %    n/m          2.20     %      n/m  

Return on average equity

     3.43            6.39        (14.13 )   %      26.63          n/m  

Efficiency ratio (2)

     64.07            28.31        n/m          52.14          n/m  

Average - total loans and leases

   $ 342,494          $ 313,367        $  21,676        $ 7,429          n/m  

Average - total deposits

     237,935            n/m        57,227          180,392          n/m  

Period end - total assets (3)

     753,495            333,552        356,527          207,168          n/m  
     Three Months Ended June 30, 2008  
     Total          Business
Lending
         Capital Markets
and Advisory
Services (1)
         Treasury
Services
         ALM/
Other
 

Net interest income (2)

   $ 3,822          $ 1,456        $    1,394        $ 856        $ 116  

Noninterest income:

                        

Service charges

     856            156        31          669          —    

Investment and brokerage services

     211            —          200          11          —    

Investment banking income

     766            —          766          —            —    

Trading account profits

     369            151        199          19          —    

All other income (loss)

     (68 )          266        (638 )        303          1  
                                                    

Total noninterest income

     2,134            573        558          1,002          1  
                                                    

Total revenue, net of interest expense

     5,956            2,029        1,952          1,858          117  
 

Provision for credit losses

     361            398        (38 )        3          (2 )

Noninterest expense

     2,793            541        1,282          917          53  
                                                    

Income before income taxes

     2,802            1,090        708          938          66  

Income tax expense (2)

     1,053            424        259          347          23  
                                                    

Net income

   $ 1,749          $ 666        $      449        $ 591        $ 43  
                                                    

Net interest yield (2)

     2.19     %        1.88     %    n/m          2.09     %      n/m  

Return on average equity

     11.59            12.04        9.13     %      29.42          n/m  

Efficiency ratio (2)

     46.90            26.60        65.71          49.34          n/m  

Average - total loans and leases

   $ 336,328          $ 308,092        $  21,042        $ 7,187          n/m  

Average - total deposits

     233,788            n/m        57,981          175,437          n/m  

Period end - total assets (3)

     780,504            322,535        393,570          194,769          n/m  
     Three Months Ended September 30, 2007  
     Total          Business
Lending
         Capital Markets
and Advisory
Services (1)
         Treasury
Services
         ALM/
Other
 

Net interest income (2)

   $ 2,713          $ 1,073        $      811        $ 928        $ (99 )

Noninterest income:

                        

Service charges

     673            115        36          522          —    

Investment and brokerage services

     236            —          225          11          —    

Investment banking income

     436            —          436          —            —    

Trading account profits (losses)

     (1,376 )          (45 )      (1,349 )        18          —    

All other income (loss)

     237            214        (277 )        271          29  
                                                    

Total noninterest income

     206            284        (929 )        822          29  
                                                    

Total revenue, net of interest expense

     2,919            1,357        (118 )        1,750          (70 )
 

Provision for credit losses

     227            238        (4 )        (8 )        1  

Noninterest expense

     2,538            552        1,083          865          38  
                                                    

Income (loss) before income taxes

     154            567        (1,197 )        893          (109 )

Income tax expense (benefit) (2)

     64            215        (441 )        330          (40 )
                                                    

Net income (loss)

   $ 90          $ 352        $    (756 )      $ 563        $ (69 )
                                                    

Net interest yield (2)

     1.62     %        1.75     %    n/m          2.77     %      n/m  

Return on average equity

     0.81            9.02        (21.91 )   %      28.08          n/m  

Efficiency ratio (2)

     86.96            40.66        n/m          49.38          n/m  

Average - total loans and leases

   $ 268,294          $ 239,376        $  22,720        $ 6,179          n/m  

Average - total deposits

     216,715            n/m        66,850          149,704          n/m  

Period end - total assets (3)

     739,427            253,231        431,506          155,919          n/m  

 

 

(1) Includes $23 million, $25 million and $22 million of net interest income on loans for which the fair value option has been elected and is not considered market-based income for the three months ended September 30, 2008, June 30, 2008 and September 30, 2007.
(2) Fully taxable-equivalent basis
(3) Total assets include asset allocations to match liabilities (i.e., deposits).

n/m = not meaningful

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  22


Bank of America Corporation and Subsidiaries

Global Corporate and Investment Banking Business Results

 

(Dollars in millions)

 

     Nine Months Ended September 30, 2008  
     Total          Business
Lending
         Capital Markets
and Advisory
Services (1)
         Treasury
Services
       ALM/
Other
 

Net interest income (2)

   $ 11,540          $ 4,439        $    4,200        $ 2,601      $ 300  

Noninterest income:

                        

Service charges

     2,503            464        101          1,938        —    

Investment and brokerage services

     674            —          643          31        —    

Investment banking income

     1,922            —          1,922          —          —    

Trading account profits (losses)

     (1,814 )          (7 )      (1,871 )        56        8  

All other income (loss)

     (1,169 )          701        (3,388 )        1,242        276  
                                                  

Total noninterest income

     2,116            1,158        (2,593 )        3,267        284  
                                                  

Total revenue, net of interest expense

     13,656            5,597        1,607          5,868        584  
 

Provision for credit losses

     1,665            1,701        (6 )        24        (54 )

Noninterest expense

     8,152            1,620        3,751          2,687        94  
                                                  

Income (loss) before income taxes

     3,839            2,276        (2,138 )        3,157        544  

Income tax expense (benefit) (2)

     1,441            870        (795 )        1,168        198  
                                                  

Net income (loss)

   $ 2,398          $ 1,406        $  (1,343 )      $ 1,989      $ 346  
                                                  

Net interest yield (2)

     2.17     %        1.91     %    n/m          2.19   %      n/m  

Return on average equity

     5.29            8.44        (9.34 )   %      32.73        n/m  

Efficiency ratio (2)

     59.69            28.93        n/m          45.79        n/m  

Average - total loans and leases

   $ 335,328          $ 306,765        $  21,292        $ 7,250        n/m  

Average - total deposits

     235,671            n/m        61,221          174,133        n/m  

Period end - total assets (3)

     753,495            333,552        356,527          207,168        n/m  
     Nine Months Ended September 30, 2007  
     Total          Business
Lending
         Capital Markets
and Advisory
Services (1)
         Treasury
Services
       ALM/
Other
 

Net interest income (2)

   $ 7,709          $ 3,224        $    1,952        $ 2,797      $ (264 )

Noninterest income:

                        

Service charges

     2,010            363        99          1,548        —    

Investment and brokerage services

     690            1        658          31        —    

Investment banking income

     1,960            —          1,960          —          —    

Trading account profits (losses)

     456            (42 )      452          46        —    

All other income (loss)

     1,460            632        (83 )        796        115  
                                                  

Total noninterest income

     6,576            954        3,086          2,421        115  
                                                  

Total revenue, net of interest expense

     14,285            4,178        5,038          5,218        (149 )
 

Provision for credit losses

     384            373        6          6        (1 )

Noninterest expense

     8,746            1,593        4,398          2,590        165  
                                                  

Income (loss) before income taxes

     5,155            2,212        634          2,622        (313 )

Income tax expense (benefit) (2)

     1,914            823        236          970        (115 )
                                                  

Net income (loss)

   $ 3,241          $ 1,389        $       398        $ 1,652      $ (198 )
                                                  

Net interest yield (2)

     1.56     %        1.82     %    n/m          2.78   %      n/m  

Return on average equity

     10.19            12.42        4.25     %      28.22        n/m  

Efficiency ratio (2)

     61.23            38.18        87.30          49.63        n/m  

Average - total loans and leases

   $ 256,899          $ 232,859        $  18,508        $ 5,581        n/m  

Average - total deposits

     214,553            n/m        64,385          149,944        n/m  

Period end - total assets (3)

     739,427            253,231        431,506          155,919        n/m  

 

 

(1) Includes $75 million and $44 million of net interest income on loans for which the fair value option has been elected and is not considered market-based income for the nine months ended September 30, 2008 and 2007.
(2) Fully taxable-equivalent basis
(3) Total assets include asset allocations to match liabilities (i.e., deposits).
n/m = not meaningful

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  23


Bank of America Corporation and Subsidiaries

Global Corporate and Investment Banking Business Results: Customer Relationship View

 

(Dollars in millions)

 

     Three Months Ended September 30, 2008  
     Total          Commercial          Corporate and
Investment Bank
         Other  

Net interest income (1)

    $   4,124          $   2,219        $    2,070        $(165 )

Noninterest income:

                   

Service charges

   858          487        371        —    

Investment and brokerage services

   218          6        212        —    

Investment banking income

   491          19        472        —    

Trading account profits (losses)

   (393 )        54        (447 )      —    

All other income (loss)

   (761 )        384        (1,400 )      255  
                                   

Total noninterest income

   413          950        (792 )      255  
                                   

Total revenue, net of interest expense

   4,537          3,169        1,278        90  
 

Provision for credit losses

   779          692        143        (56 )

Noninterest expense

   2,907          1,020        1,831        56  
                                   

Income (loss) before income taxes

   851          1,457        (696 )      90  

Income tax expense (benefit) (1)

   318          545        (258 )      31  
                                   

Net income (loss)

   $      533          $      912        $     (438 )      $   59  
                                   

Net interest yield (1)

   2.31     %      3.36     %    1.84     %    n/m  

Return on average equity

   3.43          14.76        (6.42 )      n/m  

Efficiency ratio (1)

   64.07          32.19        n/m        n/m  

Average - total loans and leases

   $342,494          $257,986        $  84,483        n/m  

Average - total deposits

   237,935          106,929        130,991        n/m  

Period end - total assets (2)

   753,495          285,939        442,095        n/m  
     Three Months Ended June 30, 2008  
     Total          Commercial          Corporate and
Investment Bank
         Other  

Net interest income (1)

   $   3,822          $   2,086        $    1,898        $(162 )

Noninterest income:

                   

Service charges

   856          498        358        —    

Investment and brokerage services

   211          7        204        —    

Investment banking income

   766          22        744        —    

Trading account profits

   369          96        273        —    

All other income (loss)

   (68 )        587        (661 )      6  
                                   

Total noninterest income

   2,134          1,210        918        6  
                                   

Total revenue, net of interest expense

   5,956          3,296        2,816        (156 )
 

Provision for credit losses

   361          415        (66 )      12  

Noninterest expense

   2,793          974        1,750        69  
                                   

Income (loss) before income taxes

   2,802          1,907        1,132        (237 )

Income tax expense (benefit) (1)

   1,053          727        415        (89 )
                                   

Net income (loss)

   $   1,749          $   1,180        $      717        $(148 )
                                   

Net interest yield (1)

   2.19     %      3.22     %    1.73     %    n/m  

Return on average equity

   11.59          20.13        10.86        n/m  

Efficiency ratio (1)

   46.90          29.53        62.19        n/m  

Average - total loans and leases

   $336,328          $256,160        $  80,150        n/m  

Average - total deposits

   233,788          107,729        126,002        n/m  

Period end - total assets (2)

   780,504          282,276        472,509        n/m  
     Three Months Ended September 30, 2007  
     Total          Commercial          Corporate and
Investment Bank
         Other  

Net interest income (1)

   $    2,713          $   1,660        $   1,167        $(114 )

Noninterest income:

                   

Service charges

   673          340        333        —    

Investment and brokerage services

   236          9        227        —    

Investment banking income

   436          21        415        —    

Trading account profits (losses)

   (1,376 )        (29 )      (1,347 )      —    

All other income (loss)

   237          439        (228 )      26  
                                   

Total noninterest income

   206          780        (600 )      26  
                                   

Total revenue, net of interest expense

   2,919          2,440        567        (88 )
 

Provision for credit losses

   227          167        60        —    

Noninterest expense

   2,538          848        1,650        40  
                                   

Income (loss) before income taxes

   154          1,425        (1,143 )      (128 )

Income tax expense (benefit) (1)

   64          532        (421 )      (47 )
                                   

Net income (loss)

   $        90          $       893        $     (722 )      $  (81 )
                                   

Net interest yield (1)

   1.62     %      3.27     %      n/m        n/m  

Return on average equity

   0.81          19.82        (14.89 )   %      n/m  

Efficiency ratio (1)

   86.96          34.77        n/m        n/m  

Average - total loans and leases

   $268,294          $196,868        $  71,404        n/m  

Average - total deposits

   216,715          90,525        126,160        n/m  

Period end - total assets (2)

   739,427          223,668        497,887        n/m  

 

 

(1) Fully taxable-equivalent basis
(2) Total assets include asset allocations to match liabilities (i.e., deposits).
n/m = not meaningful

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  24


Bank of America Corporation and Subsidiaries

Global Corporate and Investment Banking Business Results: Customer Relationship View

 

(Dollars in millions)

 

     Nine Months Ended September 30, 2008  
     Total          Commercial          Corporate and
Investment Bank
         Other  

Net interest income (1)

   $   11,540          $    6,269        $   5,750        $(479 )

Noninterest income:

                   

Service charges

   2,503          1,428        1,075        —    

Investment and brokerage services

   674          21        653        —    

Investment banking income

   1,922          62        1,860        —    

Trading account profits (losses)

   (1,814 )        (25 )      (1,797 )      8  

All other income (loss)

   (1,169 )        1,744        (3,196 )      283  
                                   

Total noninterest income

   2,116          3,230        (1,405 )      291  
                                   

Total revenue, net of interest expense

   13,656          9,499        4,345        (188 )
 

Provision for credit losses

   1,665          1,623        85        (43 )

Noninterest expense

   8,152          2,870        5,139        143  
                                   

Income (loss) before income taxes

   3,839          5,006        (879 )      (288 )

Income tax expense (benefit) (1)

   1,441          1,879        (329 )      (109 )
                                   

Net income (loss)

   $   2,398          $    3,127        $     (550 )      $(179 )
                                   

Net interest yield (1)

   2.17     %      3.23     %    1.70     %    n/m  

Return on average equity

   5.29          17.60        (2.79 )      n/m  

Efficiency ratio (1)

   59.69          30.22        n/m        n/m  

Average - total loans and leases

   $335,328          $254,702        $  80,598        n/m  

Average - total deposits

   235,671          104,872        130,769        n/m  

Period end - total assets (2)

   753,495          285,939        442,095        n/m  
     Nine Months Ended September 30, 2007  
     Total          Commercial          Corporate and
Investment Bank
         Other  

Net interest income (1)

   $    7,709          $    4,933        $    3,098        $(322 )

Noninterest income:

                   

Service charges

   2,010          1,031        979        —    

Investment and brokerage services

   690          26        664        —    

Investment banking income

   1,960          58        1,902        —    

Trading account profits (losses)

   456          (23 )      478        1  

All other income

   1,460          1,351        1        108  
                                   

Total noninterest income

   6,576          2,443        4,024        109  
                                   

Total revenue, net of interest expense

   14,285          7,376        7,122        (213 )
 

Provision for credit losses

   384          302        80        2  

Noninterest expense

   8,746          2,820        5,763        163  
                                   

Income (loss) before income taxes

   5,155          4,254        1,279        (378 )

Income tax expense (benefit) (1)

   1,914          1,578        475        (139 )
                                   

Net income (loss)

   $    3,241          $    2,676        $       804        $(239 )
                                   

Net interest yield (1)

   1.56     %      3.33     %    n/m        n/m  

Return on average equity

   10.19          20.73        5.95     %    n/m  

Efficiency ratio (1)

   61.23          38.24        80.94        n/m  

Average - total loans and leases

   256,899          $193,600        $  63,351        n/m  

Average - total deposits

   214,553          90,885        123,664        n/m  

Period end - total assets (2)

   739,427          223,668        497,887        n/m  

 

 

(1) Fully taxable-equivalent basis
(2) Total assets include asset allocations to match liabilities (i.e., deposits).
n/m = not meaningful

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  25


Bank of America Corporation and Subsidiaries

Global Corporate and Investment Banking - Business Lending Key Indicators

 

(Dollars in millions)

 

     Nine Months Ended
September 30
         Third
Quarter

2008
        Second
Quarter

2008
         First
Quarter

2008
        Fourth
Quarter

2007
         Third
Quarter

2007
     
     2008         2007                                  

Business lending revenue, net of interest expense

                                       

Corporate lending (1)

   $ 874       $ 509          $ 312       $ 249        $ 313       $ 236        $ 148    

Commercial lending

     4,065         3,119            1,293         1,470          1,302         1,601          1,039    

Consumer indirect lending

     658         550            324         310          24         64          170    
                                                                           

Total revenue, net of interest expense

   $ 5,597       $ 4,178          $ 1,929       $ 2,029        $ 1,639       $ 1,901        $ 1,357    
                                                                           
 

Business lending margin

                                       

Corporate lending

     1.00    %      0.81     %        1.07    %      0.97     %      0.95    %      0.76     %      0.51     %

Commercial lending

     1.54         1.49            1.50         1.51          1.60         2.17          1.49    

Consumer indirect lending

     1.88         1.70            1.98         1.85          1.81         1.65          1.71    
 

Provision for credit losses

                                       

Corporate lending

   $ 64       $ 68          $ 84       $ (31 )      $ 11       $ (26 )      $ 66    

Commercial lending

     1,033         48            416         294          323         144          70    

Consumer indirect lending

     604         257            280         135          189         162          102    
                                                                           

Total provision for credit losses

   $ 1,701       $ 373          $ 780       $ 398        $ 523       $ 280        $ 238    
                                                                           
 

Credit quality (2, 3, 4)

                                       

Utilized criticized exposure

                                       

Corporate lending

   $ 6,378       $ 1,535          $ 6,378       $ 4,942        $ 3,242       $ 2,102        $ 1,535    
     5.83    %      1.99     %        5.83    %      4.98     %      3.28    %      2.44     %      1.99     %

Commercial lending

   $ 24,831       $ 8,006          $ 24,831       $ 21,168        $ 17,351       $ 13,926        $ 8,006    
     9.18    %      4.23     %        9.18    %      7.98     %      6.75    %      5.40     %      4.23     %
                                                                           

Total utilized criticized exposure

   $ 31,209       $ 9,541          $ 31,209       $ 26,110        $ 20,593       $ 16,028        $ 9,541    
     8.22    %      3.58     %        8.22    %      7.17     %      5.79    %      4.81     %      3.58     %

Nonperforming assets

                                       

Corporate lending

   $ 407       $ 269          $ 407       $ 150        $ 150       $ 115        $ 269    
     0.65    %      0.62     %        0.65    %      0.28     %      0.30    %      0.24     %      0.62     %

Commercial lending

   $ 4,370       $ 777          $ 4,370       $ 3,680        $ 2,603       $ 1,923        $ 777    
     1.69    %      0.39     %        1.69    %      1.42     %      1.02    %      0.78     %      0.39     %
                                                                           

Total nonperforming assets

   $ 4,777       $ 1,046          $ 4,777       $ 3,830        $ 2,753       $ 2,038        $ 1,046    
     1.49    %      0.43     %        1.49    %      1.22     %      0.91    %      0.69     %      0.43     %

Average loans and leases by product

                                       

Commercial

   $ 157,149       $ 117,855          $ 160,648       $ 157,850        $ 152,914       $ 150,192        $ 120,357    

Leases

     24,376         21,745            24,574         24,287          24,264         24,246          22,051    

Foreign

     24,405         15,948            25,256         25,132          22,818         22,930          17,952    

Real estate

     58,650         34,867            59,169         58,656          58,118         55,814          36,120    

Consumer

     40,445         40,418            42,205         40,345          38,765         39,613          40,956    

Other

     1,740         2,026            1,515         1,822          1,885         1,991          1,940    
                                                                           

Total average loans and leases

   $ 306,765       $ 232,859          $ 313,367       $ 308,092        $ 298,764       $ 294,786        $ 239,376    
                                                                         

 

                                     

(1)    Total corporate lending revenue

   $ 874       $ 509          $ 312       $ 249        $ 313       $ 236        $ 148    

Less: Impact of credit mitigation

     88         (21 )          24         (5 )        69         7          (7 )  
                                                                           

Corporate lending revenues excluding credit mitigation

   $ 786       $ 530          $ 288       $ 254        $ 244       $ 229        $ 155    
                                                                         

 

(2) Criticized exposure corresponds to the Special Mention, Substandard and Doubtful asset categories defined by regulatory authorities. The criticized exposure is on an end-of-period basis and is also shown as a percentage of total commercial utilized credit exposure, including loans and leases, standby letters of credit, and financial guarantees, derivative assets, and commercial letters of credit.
(3) Nonperforming assets are on an end-of-period basis and defined as nonperforming loans and leases plus foreclosed properties. The nonperforming ratio is nonperforming assets divided by commercial loans and leases plus commercial foreclosed properties.
(4) Criticized exposure related to the fair value option portfolio is not included. There are no nonperforming assets in the fair value portfolio.

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  26


Bank of America Corporation and Subsidiaries

Global Corporate and Investment Banking - Capital Markets and Advisory Services Key Indicators

 

(Dollars in millions)

 

     Nine Months Ended
September 30
         Third
Quarter
2008
    Second
Quarter
2008
    First
Quarter
2008
    Fourth
Quarter
2007
    Third
Quarter
2007
 
     2008     2007              

Investment banking income

                    

Advisory fees

   $       180     $       334         $          63     $        51     $         66     $       112     $        94  

Debt underwriting

   1,342     1,395         378     605     359     377     281  

Equity underwriting

   400     231         50     110     240     88     61  
                                              

Total investment banking income

   1,922     1,960         491     766     665     577     436  
                                              

Sales and trading revenue

                    

Fixed income:

                    

Liquid products

   3,027     1,559         1,063     1,102     862     596     634  

Credit products

   (123 )   171         (151 )   683     (655 )   (383 )   (844 )

Structured products

   (4,101 )   185         (1,329 )   (922 )   (1,850 )   (5,511 )   (618 )
                                              

Total fixed income

   (1,197 )   1,915         (417 )   863     (1,643 )   (5,298 )   (828 )

Equity income

   807     1,119         175     298     334     206     252  
                                              

Total sales and trading revenue

   (390 )   3,034         (242 )   1,161     (1,309 )   (5,092 )   (576 )
                                              

Total Capital Markets and Advisory Services market-based revenue (1)

   $    1,532     $    4,994         $       249     $    1,927     $      (644 )   $   (4,515 )   $      (140 )
                                              

Balance sheet (average)

                    

Trading account securities

   $187,399     $183,705         $188,218     $183,119     $190,849     $188,925     $192,844  

Reverse repurchases

   57,094     63,193         63,375     51,655     56,184     51,266     52,436  

Securities borrowed

   69,165     90,358         62,982     65,742     78,839     84,399     81,404  

Derivative assets

   35,043     25,796         34,643     35,537     34,953     28,282     28,611  
                                              

Total trading-related assets

   $348,701     $363,052         $349,218     $336,053     $360,825     $352,872     $355,295  
                                              

Sales credits from secondary trading

                    

Liquid products

   1,511     1,327         510     479     522     467     507  

Credit products

   1,033     1,198         295     384     354     346     422  

Structured products

   558     628         190     202     166     133     161  

Equities

   733     864         192     259     282     262     277  
                                              

Total sales credits

   3,835     4,017         1,187     1,324     1,324     1,208     1,367  
                                              

Volatility of product revenues - 1 std dev

                    

Liquid products

   $      22.9     $     11.5         $      27.1     $     22.4     $     17.8     $      10.4     $      16.3  

Credit products

   23.1     11.4         24.7     8.8     26.5     12.0     21.8  

Structured products

   11.1     16.1         7.6     10.2     14.3     408.1     33.5  

Equities

   13.7     9.2         10.1     14.1     15.8     7.3     16.3  

Total volatility

   57.5     28.6         58.4     40.6     64.4     405.5     54.9  

 

 

(1) Excludes $75 million and $44 million for the nine months ended September 30, 2008 and 2007, and $23 million, $25 million, $27 million, $26 million and $22 million, respectively, for the three months ended September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007 and September 30, 2007, of net interest income on loans for which the fair value option has been elected and is not considered market-based income.

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  27


Bank of America Corporation and Subsidiaries

Global Corporate and Investment Banking Strategic Progress

 

LOGO

Source: Thomson Financial except Syndicated Loans and Leveraged Loans from Loan Pricing Corporation. Ranked based on deal size.

 

(1) M&A Announced Advisor Rankings

Highlights

 

   

Top 5 rankings in:

 

Leveraged loans

Convertible debt

High-yield debt

Syndicated loans

  

Asset-backed securities

Mortgage-backed securities

Investment grade debt

  

 

   

Market share for convertible debt, asset-backed securities and investment grade debt for YTD 08 includes self-funded deals, market share without these deals was 11.7%, 9.1% and 10.1%, respectively.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  28


Bank of America Corporation and Subsidiaries

Special Purpose Entities Liquidity Exposure

 

(Dollars in millions)

 

     September 30, 2008
     VIEs (1)    QSPEs (2)     
     Consolidated    Unconsolidated    Unconsolidated    Total

Corporation-sponsored multi-seller conduits

   $        13,110    $        42,440    $            —      $55,550

Municipal bond trusts and corporate SPEs

   4,148    4,714    4,735    13,597

Home equity securitizations (3)

   —      —      13,315    13,315

Asset acquisition conduits

   1,130    5,619    —      6,749

Customer-sponsored conduits

   —      1,142    —      1,142

Collateralized debt obligation vehicles

   —      1,051    —      1,051
                   

Total liquidity exposure

   $        18,388    $        54,966    $      18,050    $91,404
                   
     June 30, 2008
     VIEs (1)    QSPEs (2)     
     Consolidated    Unconsolidated    Unconsolidated    Total

Corporation-sponsored multi-seller conduits

   $        14,214    $        47,754    $            —      $61,968

Municipal bond trusts and corporate SPEs

   4,645    4,168    5,419    14,232

Asset acquisition conduits

   1,157    4,116    —      5,273

Customer-sponsored conduits

   —      1,231    —      1,231

Collateralized debt obligation vehicles

   —      1,077    —      1,077
                   

Total liquidity exposure

   $        20,016    $        58,346    $          5,419    $83,781
                   

 

 

(1) Variable interest entities (VIEs) are special purpose entities (SPEs) which lack sufficient equity at risk or whose equity investors do not have a controlling financial interest. In accordance with Financial Accounting Standards Board (FASB) Interpretation No. 46 (Revised December 2003), “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51” (FIN 46R), a VIE is consolidated by the party known as the primary beneficiary that will absorb the majority of the expected losses or expected residual returns of the VIEs or both. For example, an entity that holds a majority of the subordinated debt or equity securities issued by a VIE, or protects other investors from loss through a guarantee or similar arrangement, may have to consolidate the VIE. The assets and liabilities of consolidated VIEs are recorded on the Corporation’s balance sheet.
(2) Qualifying special purposes entities (QSPEs) are SPEs whose activities are strictly limited to holding and servicing financial assets and meet the requirements set forth in SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities – a replacement of FASB Statement No. 125” (SFAS 140). QSPEs are generally not required to be consolidated by any party. This table includes only those QSPEs to which we have liquidity exposure.
(3) Home equity securitizations were acquired in connection with the July 1, 2008 acquisition of Countrywide Financial Corporation (Countrywide).

 

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  29


Bank of America Corporation and Subsidiaries

Super Senior Collateralized Debt Obligation Exposure Rollforward

 

(Dollars in millions)

 

     June 30, 2008
Net Exposure
   Paydowns / Liquidations / Other     Third Quarter 2008
Net Writedowns (1)
    September 30, 2008
Net Exposure

Super senior liquidity commitments

         

High grade

   $             714    $                                  (26)     $                  —       $                   688

Mezzanine

   358    —       (21 )   337

CDO-squared

   —      —       —       —  
                     

Total super senior liquidity commitments

   1,072    (26 )   (21 )   1,025
                     

Other super senior exposure

         

High grade

   3,608    (13 )   (257 )   3,338

Mezzanine

   277    (14 )   (84 )   179

CDO-squared

   1,804    (9 )   (363 )   1,432
                     

Total other super senior

   5,689    (36 )   (704 )   4,949
                     

Total super senior

   $          6,761    $                                  (62 )   $                (725 )   $                5,974
                     

Purchased securities from liquidated CDOs

   1,667    (57 )   (152 )   1,458
                     

Total

   $          8,428    $                                (119 )   $                (877 )   $                7,432
                     

 

 

(1) Net of insurance.

Super Senior Collateralized Debt Obligation Exposure

 

(Dollars in millions)

 

    Total CDO Exposure at September 30, 2008   Total CDO
    Subprime Exposure (1)   Non-Subprime Exposure (2)   Net Exposure
    Gross   Insured     Net of
Insured
Amount
  Cumulative
Writedowns (3)
    Net
Exposure
  Gross   Insured     Net of
Insured
Amount
  Cumulative
Writedowns (3)
    Net
Exposure
  September 30
2008
  June 30
2008

Super senior liquidity commitments

                       

High grade

  $    —     $    —       $  —     $          —       $     —     $   688   $    —       $     688   $          —       $     688   $       688   $   714

Mezzanine

  363   —       363   (26 )   337   —     —       —     —       —     337   358

CDO-squared

  —     —       —     —       —     —     —       —     —       —     —     —  
                                                       

Total super senior liquidity commitments

  363   —       363   (26 )   337   688   —       688   —       688   1,025   1,072

Other super senior exposure

                       

High grade

  5,142   (3,723 )   1,419   (477 )   942   3,459   (735 )   2,724   (328 )   2,396   3,338   3,608

Mezzanine

  1,006   —       1,006   (827 )   179   —     —       —     —       —     179   277

CDO-squared

  5,098   —       5,098   (3,666 )   1,432   349   (349 )   —     —       —     1,432   1,804
                                                       

Total other super senior

  11,246   (3,723 )   7,523   (4,970 )   2,553   3,808   (1,084 )   2,724   (328 )   2,396   4,949   5,689
                                                       

Total super senior

  $11,609   $(3,723 )   $7,886   $      (4,996 )   $  2,890   4,496   (1,084 )   $  3,412   $        (328 )   $  3,084   $    5,974   $6,761
                                                       

Purchased securities from liquidated CDOs

  1,750   —       1,750   (292 )   1,458   —     —       —     —       —     1,458   1,667
                                                       

Total

  $13,359   $(3,723 )   $9,636   $      (5,288 )   $  4,348   $4,496   $(1,084 )   $  3,412   $        (328 )   $  3,084   $    7,432   $8,428
                                                       

 

 

(1) Classified as subprime when subprime consumer real estate loans make up at least 35 percent of the ultimate underlying collateral’s original net exposure value.
(2) Includes highly-rated collateralized loan obligations and commercial mortgage-backed securities super senior exposure.
(3) Net of insurance excluding losses taken on liquidated CDOs.

 

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  30


Bank of America Corporation and Subsidiaries

Subprime Super Senior Collateralized Debt Obligation Carrying Values (1)

 

(Dollars in millions)

 

     September 30, 2008
     Subprime
Net Exposure
   Carrying Value
as a Percent of
Original Net
Exposure
        Subprime Content
of Collateral (2)
        Vintage of Subprime Collateral
                  Percent in
2006/2007
Vintages
        Percent in
2005/Prior
Vintages
    

Super senior liquidity commitments

                          

High grade

   $            —      —      %    —      %    —      %    —      %

Mezzanine

   337    93       42       46       54   

CDO-squared

   —      —         —         —         —     
                            

Total super senior liquidity commitments

   337    93                     
                            

Other super senior exposure

                          

High grade

   942    66       56       14       86   

Mezzanine

   179    18       73       69       31   

CDO-squared

   1,432    28       23       71       29   
                            

Total other super senior

   2,553    34                     
                            

Total super senior

   $          2,890    37                     
                            

Purchased securities from liquidated CDOs

   1,458    48       51       38       62   
                            

Total

   $          4,348    40                     
                            

 

 

(1) Classified as subprime when subprime consumer real estate loans make up at least 35 percent of the ultimate underlying collateral’s original net exposure value.
(2) Based on current net exposure value.

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  31


Bank of America Corporation and Subsidiaries

Global Wealth and Investment Management Segment Results (1, 2)

 

(Dollars in millions, except as noted)

 

     Nine Months Ended
September 30
          Third
Quarter
2008
         Second
Quarter
2008
         First
Quarter
2008
         Fourth
Quarter
2007
         Third
Quarter
2007
     
     2008          2007                                

Net interest income (3)

   $ 3,380        $ 2,872          $ 1,249        $ 1,133        $ 998        $ 989        $ 1,002    

Noninterest income:

                                    

Investment and brokerage services

     3,178          2,701            1,002          1,095          1,081          1,080          1,032    

All other income (loss)

     (810 )        174            (704 )        51          (157 )        (319 )        44    
                                                                              

Total noninterest income

     2,368          2,875            298          1,146          924          761          1,076    
                                                                              

Total revenue, net of interest expense

     5,748          5,747            1,547          2,279          1,922          1,750          2,078    
 

Provision for credit losses

     512          (20 )          150          119          243          34          (29 )  

Noninterest expense

     3,836          3,183            1,284          1,241          1,311          1,297          1,218    
                                                                              

Income before income taxes

     1,400          2,584            113          919          368          419          889    

Income tax expense (3)

     529          958            46          346          137          120          331    
                                                                              

Net income

   $ 871        $ 1,626          $ 67        $ 573        $ 231        $ 299        $ 558    
                                                                              

Net interest yield (3)

     2.90     %      3.14          3.05     %      2.91     %      2.73     %      2.86     %      3.10     %

Return on average equity

     9.97          23.14            2.30          19.55          8.04          10.45          20.67    

Efficiency ratio (3)

     66.74          55.38            82.95          54.49          68.21          74.11          58.62    
 

Balance sheet

                                    
 

Average

                                    

Total loans and leases

   $ 87,160        $ 70,325          $ 88,253        $ 87,573        $ 85,642        $ 82,816        $ 77,045    

Total earning assets (4)

     155,491          122,263            162,859          156,419          147,115          137,144          128,148    

Total assets (4)

     165,063          129,530            172,313          165,869          156,928          147,390          137,093    

Total deposits

     155,558          120,392            160,999          157,114          148,503          138,163          127,821    

Allocated equity

     11,674          9,391            11,677          11,774          11,570          11,345          10,700    
 

Period end

                                    

Total loans and leases

   $ 88,979        $ 78,324          $ 88,979        $ 88,171        $ 87,308        $ 84,600        $ 78,324    

Total earning assets (4)

     169,582          130,304            169,582          157,334          153,743          145,056          130,304    

Total assets (4)

     179,347          138,725            179,347          167,197          163,018          155,683          138,725    

Total deposits

     166,273          130,534            166,273          158,228          154,175          144,865          130,534    
 

Client assets (5)

                                    

Assets under management

   $ 564,438        $ 709,955          $ 564,438        $ 589,459        $ 607,521        $ 643,531        $ 709,955    

Client brokerage assets (6)

     196,566          217,916            196,566          210,701          213,743          222,661          217,916    

Assets in custody

     150,575          158,756            150,575          156,530          158,486          167,575          158,756    

Less: Client brokerage assets and assets in custody included in assets under management

     (82,921 )        (87,386 )          (82,921 )        (89,234 )        (88,755 )        (87,071 )        (87,386 )  
                                                                              

Total net client assets

   $ 828,658        $ 999,241          $ 828,658        $ 867,456        $ 890,995        $ 946,696        $ 999,241    
                                                                              

 

 

(1) Global Wealth and Investment Management services clients through three primary businesses: U.S. Trust, Bank of America Private Wealth Management (U.S. Trust), Columbia Management, and Premier Banking and Investments. In addition, ALM/Other primarily includes the results of ALM activities.
(2) In July 2007, the operations of the acquired U.S. Trust Corporation were combined with the former Private Bank to create U.S. Trust, Bank of America Private Wealth Management. The results of the combined business were reported for periods beginning on July 1, 2007. Prior to July 1, 2007, the results solely reflect that of the former Private Bank.
(3) Fully taxable-equivalent basis
(4) Total earning assets and total assets include asset allocations to match liabilities (i.e., deposits).
(5) In December 2007, the Corporation completed the sale of Marsico Capital Management, LLC (Marsico). Total assets under management for the third quarter of 2007 include assets under management that were managed prior to the sale of Marsico of $59.5 billion (including $5.3 billion in eliminations). Prior period Marsico business results have been transferred to All Other to better facilitate period-over-period comparisons.
(6) Client brokerage assets include non-discretionary brokerage and fee-based assets.

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  32


Bank of America Corporation and Subsidiaries

Global Wealth and Investment Management Business Results

 

(Dollars in millions)

 

     Three Months Ended September 30, 2008
     Total          U.S. Trust (1)          Columbia
Management
         Premier
Banking and
Investments (2)
         ALM/
Other

Net interest income (3)

   $        1,249        $         314        $              1        $              534        $  400

Noninterest income:

                      

Investment and brokerage services

   1,002        327        394        242        39

All other income (loss)

   (704 )      (12 )      (635 )      (57 )      —  
                                        

Total noninterest income

   298        315        (241 )      185        39
                                        

Total revenue, net of interest expense

   1,547        629        (240 )      719        439
 

Provision for credit losses

   150        15        —          135        —  

Noninterest expense

   1,284        486        322        438        38
                                        

Income (loss) before income taxes

   113        128        (562 )      146        401

Income tax expense (benefit) (3)

   46        47        (208 )      54        153
                                        

Net income (loss)

   $             67        $            81        $          (354 )      $                92        $  248
                                        

Net interest yield (3)

   3.05        2.35        n/m        1.71        n/m

Return on average equity

   2.30        6.85        n/m        19.48        n/m

Efficiency ratio (3)

   82.95        77.19        n/m        60.89        n/m

Average - total loans and leases

   $      88,253        $     53,174        n/m        $          35,077        n/m

Average - total deposits

   160,999        37,446        n/m        123,524        n/m

Period end - total assets (4)

   179,347        57,601        $         3,084        128,242        n/m
     Three Months Ended June 30, 2008
     Total          U.S. Trust (1)          Columbia
Management
         Premier
Banking and
Investments (2)
         ALM/
Other

Net interest income (3)

   $        1,133        $          304        $              (4 )      $              536        $  297

Noninterest income:

                      

Investment and brokerage services

   1,095        387        403        263        42

All other income (loss)

   51        15        (34 )      66        4
                                        

Total noninterest income

   1,146        402        369        329        46
                                        

Total revenue, net of interest expense

   2,279        706        365        865        343
 

Provision for credit losses

   119        6        —          113        —  

Noninterest expense

   1,241        458        302        452        29
                                        

Income before income taxes

   919        242        63        300        314

Income tax expense (3)

   346        90        24        111        121
                                        

Net income

   $           573        $          152        $             39        $             189        $  193
                                        

Net interest yield (3)

   2.91        2.40        n/m        1.79        n/m

Return on average equity

   19.55        12.94        23.30        39.01        n/m

Efficiency ratio (3)

   54.49        64.83        82.80        52.32        n/m

Average - total loans and leases

   $      87,573        $     51,051        n/m        $        36,507        n/m

Average - total deposits

   157,114        36,452        n/m        120,339        n/m

Period end - total assets (4)

   167,197        56,560        $        2,819        123,359        n/m
     Three Months Ended September 30, 2007
     Total          U.S. Trust (1)          Columbia
Management
         Premier
Banking and
Investments (2)
         ALM/
Other

Net interest income (3)

   $        1,002        $          289        $               3        $              679        $  31

Noninterest income:

                      

Investment and brokerage services

   1,032        364        379        243        46

All other income (loss)

   44        15        (6 )      34        1
                                        

Total noninterest income

   1,076        379        373        277        47
                                        

Total revenue, net of interest expense

   2,078        668        376        956        78
 

Provision for credit losses

   (29 )      (34 )      —          5        —  

Noninterest expense

   1,218        480        266        430        42
                                        

Income before income taxes

   889        222        110        521        36

Income tax expense (3)

   331        82        41        193        15
                                        

Net income

   $           558        $          140        $             69        $               328        $  21
                                        

Net interest yield (3)

   3.10        2.76        n/m        2.74        n/m

Return on average equity

   20.67        14.70        53.23        81.06        n/m

Efficiency ratio (3)

   58.62        71.91        70.82        45.05        n/m

Average - total loans and leases

   $      77,045        $     41,522        n/m        $          35,482        n/m

Average - total deposits

   127,821        28,649        n/m        98,341        n/m

Period end - total assets (4)

   138,725        46,034        $        1,407        102,180        n/m

 

 

(1) In July 2007, the operations of the acquired U.S. Trust Corporation were combined with the former Private Bank to create U.S. Trust, Bank of America Private Wealth Management.

The results of the combined business were reported for periods beginning on July 1, 2007. Prior to July 1, 2007, the results solely reflect that of the former Private Bank.

(2) For the three months ended September 30, 2008, June 30, 2008 and September 30, 2007, a total of $3.3 billion, $5.6 billion and $2.6 billion of deposits were migrated to Global Wealth and Investment Management from Global Consumer and Small Business Banking.
(3) Fully taxable-equivalent basis
(4) Total assets include asset allocations to match liabilities (i.e., deposits).

n/m = not meaningful

 

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  33


Bank of America Corporation and Subsidiaries

Global Wealth and Investment Management Business Results

 

(Dollars in millions)

 

     Nine Months Ended September 30, 2008
     Total          U.S. Trust (1)          Columbia
Management
         Premier
Banking and
Investments (2)
        ALM/
Other

Net interest income (3)

   $  3,380          $            896        $              (2 )      $          1,605       $     881

Noninterest income:

                         

Investment and brokerage services

   3,178          1,093        1,195        763       127

All other income (loss)

   (810 )        21        (890 )      57       2
                                         

Total noninterest income

   2,368          1,114        305        820       129
                                         

Total revenue, net of interest expense

   5,748          2,010        303        2,425       1,010
 

Provision for credit losses

   512          25        —          487       —  

Noninterest expense

   3,836          1,447        930        1,330       129
                                         

Income (loss) before income taxes

   1,400          538        (627 )      608       881

Income tax expense (benefit) (3)

   529          199        (232 )      225       337
                                         

Net income (loss)

   $     871          $            339        $          (395 )      $             383       $     544
                                         
 

Net interest yield (3)

   2.90     %      2.36     %      n/m        1.80    %      n/m

Return on average equity

   9.97          9.82        (78.01 )      26.51       n/m

Efficiency ratio (3)

   66.74          71.98        n/m        54.82       n/m

Average - total loans and leases

   $87,160          $      50,727        n/m        $        36,416       n/m

Average - total deposits

   155,558          36,182        n/m        119,088       n/m

Period end - total assets (4)

   179,347          57,601        $        3,084        128,242       n/m
     Nine Months Ended September 30, 2007
     Total          U.S. Trust (1)          Columbia
Management
         Premier
Banking and
Investments (2)
        ALM/
Other

Net interest income (3)

   $  2,872          $            738        $                4        $          2,009       $     121

Noninterest income:

                         

Investment and brokerage services

   2,701          843        1,034        704       120

All other income

   174          39        19        104       12
                                         

Total noninterest income

   2,875          882        1,053        808       132
                                         

Total revenue, net of interest expense

   5,747          1,620        1,057        2,817       253
 

Provision for credit losses

   (20 )        (25 )      —          5       —  

Noninterest expense

   3,183          1,097        745        1,264       77
                                         

Income before income taxes

   2,584          548        312        1,548       176

Income tax expense (3)

   958          203        115        573       67
                                         

Net income

   $  1,626          $            345        $            197        $             975       $     109
                                         
 

Net interest yield (3)

   3.14     %      2.74     %      n/m        2.80    %      n/m

Return on average equity

   23.14          20.61        53.93     %      81.05       n/m

Efficiency ratio (3)

   55.38          67.74        70.44        44.88       n/m

Average - total loans and leases

   $70,325          $       35,999        n/m        $        34,302       n/m

Average - total deposits

   120,392          24,024        n/m        96,065       n/m

Period end - total assets (4)

   138,725          46,034        $          1,407        102,180       n/m

 

 

(1) In July 2007, the operations of the acquired U.S. Trust Corporation were combined with the former Private Bank to create U.S. Trust, Bank of America Private Wealth Management.

The results of the combined business were reported for periods beginning on July 1, 2007. Prior to July 1, 2007, the results solely reflect that of the former Private Bank.

(2) For the nine months ended September 30, 2008 and 2007, a total of $15.9 billion and $9.0 billion of deposits were migrated to Global Wealth and Investment Management from Global Consumer and Small Business Banking.
(3) Fully taxable-equivalent basis
(4) Total assets include asset allocations to match liabilities (i.e., deposits).

n/m = not meaningful

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  34


Bank of America Corporation and Subsidiaries

Global Wealth and Investment Management - Key Indicators

 

(Dollars in millions, except as noted)

 

     Nine Months Ended
September 30
          Third
Quarter

2008
         Second
Quarter

2008
         First
Quarter

2008
         Fourth
Quarter

2007
         Third
Quarter

2007
     
     2008          2007                             

Investment and Brokerage Services

                                    
 

U.S. Trust (1)

                                    

Asset management fees

       $ 1,058            $ 822              $ 316            $ 374            $ 368            $ 378            $ 356    

Brokerage income

     35          21            11          13          11          8          8    
                                                                              

Total

       $ 1,093            $ 843              $ 327            $ 387            $ 379            $ 386            $ 364    
                                                                              
 

Columbia Management

                                    

Asset management fees

       $ 1,193            $ 1,030              $ 394            $ 402            $ 397            $ 401            $ 378    

Brokerage income

     2          4            —            1          1          —            1    
                                                                              

Total

       $ 1,195            $ 1,034              $ 394            $ 403            $ 398            $ 401            $ 379    
                                                                              
 

Premier Banking and Investments

                                    

Asset management fees

       $ 257            $ 220              $ 85            $ 84            $ 88            $ 81            $ 81    

Brokerage income

     506          484            157          179          170          165          162    
                                                                              

Total

       $ 763            $ 704              $ 242            $ 263            $ 258            $ 246            $ 243    
                                                                              
 

ALM/Other

                                    

Asset management fees

       $ 127            $ 120              $ 39            $ 42            $ 46            $ 47            $ 46    

Brokerage income

     —            —              —            —            —            —            —      
                                                                              

Total

       $ 127            $ 120              $ 39            $ 42            $ 46            $ 47            $ 46    
                                                                              
 

Total Global Wealth and Investment Management

                                    

Asset management fees

       $ 2,635            $ 2,192              $ 834            $ 902            $ 899            $ 907            $ 861    

Brokerage income

     543          509            168          193          182          173          171    
                                                                              

Total investment and brokerage services

       $ 3,178            $ 2,701              $ 1,002            $ 1,095            $ 1,081            $ 1,080            $ 1,032    
                                                                              
 

Assets Under Management (2, 3)

                                    
 

Assets under management by business:

                                    

U.S. Trust (1)

       $ 199,682            $ 225,297              $ 199,682            $ 210,969            $ 214,526            $ 225,209            $ 225,297    

Columbia Management

     407,345          511,996            407,345          422,827          409,064          439,053          511,996    

Retirement and GWIM Client Solutions

     39,547          44,512            39,547          45,907          48,655          42,814          44,512    

Premier Banking and Investments

     20,246          21,392            20,246          22,404          21,600          22,915          21,392    

Eliminations (4)

     (102,621 )        (94,255 )          (102,621 )        (113,001 )        (86,760 )        (87,085 )        (94,255 )  

International Wealth Management

     239          1,013            239          353          436          625          1,013    
                                                                              

Total assets under management

       $ 564,438            $ 709,955              $ 564,438            $ 589,459            $ 607,521            $ 643,531            $ 709,955    
                                                                              
 

Assets under management rollforward:

                                    

Beginning balance

       $ 643,531            $ 542,977              $ 589,459            $ 607,521            $ 643,531            $ 709,955            $ 566,267    

Net flows

     (11,399 )        27,497            7,477          (12,611 )        (6,265 )        (2,226 )        18,066    

Market valuation/other

     (67,694 )        139,481            (32,498 )        (5,451 )        (29,745 )        (64,198 )        125,622    
                                                                              

Ending balance

       $ 564,438            $ 709,955              $ 564,438            $ 589,459            $ 607,521            $ 643,531            $ 709,955    
                                                                              
 

Assets under management mix:

                                    

Money market/other

       $ 238,075            $ 246,748              $ 238,075            $ 225,887            $ 242,956            $ 246,213            $ 246,748    

Fixed income

     102,596          109,117            102,596          107,687          107,365          111,217          109,117    

Equity

     223,767          354,090            223,767          255,885          257,200          286,101          354,090    
                                                                              

Total assets under management

       $ 564,438            $ 709,955              $ 564,438            $ 589,459            $ 607,521            $ 643,531            $ 709,955    
                                                                              
 

Client Brokerage Assets

       $ 196,566            $ 217,916              $ 196,566            $ 210,701            $ 213,743            $ 222,661            $ 217,916    
 

Premier Banking and Investments Metrics

                                    
 

Client facing associates

                                    

Number of client managers

     2,492          2,505            2,492          2,538          2,572          2,548          2,505    

Number of financial advisors

     1,964          1,847            1,964          1,974          1,952          1,950          1,847    

All other

     1,105          1,020            1,105          1,086          1,157          1,079          1,020    
                                                                              

Total client facing associates

     5,561          5,372            5,561          5,598          5,681          5,577          5,372    
                                                                              
 

Financial Advisor Productivity (5)
(in thousands)

       $ 348            $ 332              $ 109            $ 121            $ 118            $ 113            $ 116    
 

Total client balances (6)

       $ 301,093            $ 299,275              $ 301,093            $ 308,174            $ 309,687            $ 309,190            $ 299,275    
 

Number of Households with Banking and Brokerage Relationships (in thousands)

     292          267            292          288          283          277          267    
 

U.S. Trust Metrics (1) 

                                    
 

Client facing associates

     3,747          3,776            3,747          3,882          3,922          3,989          3,776    

Total client balances (6)

       $ 344,004            $ 360,864              $ 344,004        $ 357,575            $ 362,425            $ 380,687            $ 360,864    
 

Columbia Management Performance Metrics

                                    
 

# of 4 or 5 Star Funds by Morningstar

     53          47            53          50          50          48          47    
                                    

% of Assets Under Management in 4 or 5 Star Rated Funds (7)

     64     %      55     %        64     %        64     %        69     %        68     %      55     %

 

 

(1) In July 2007, the operations of the acquired U.S. Trust Corporation were combined with the former Private Bank to create U.S. Trust, Bank of America Private Wealth Management. The results of the combined business were reported for periods beginning on July 1, 2007. Prior to July 1, 2007, the results solely reflect that of the former Private Bank.
(2) The acquisition of LaSalle Bank Corporation contributed $7.5 billion to assets under management in fourth quarter 2007. The acquisition of U.S. Trust Corporation contributed $115.6 billion to assets under management in third quarter 2007. The sale of Marsico resulted in a $60.9 billion decrease in assets under management in fourth quarter 2007 (including a $5.3 billion reduction in eliminations).
(3) In December 2007, the Corporation completed the sale of Marsico. Total assets under management for the third quarter of 2007 include assets under management that were managed prior to the sale of Marsico of $59.5 billion (including $5.3 billion in eliminations). Prior period Marsico business results have been transferred to All Other to better facilitate period-over-period comparisons.
(4) The elimination of assets under management that are managed by two lines of business.
(5) Financial advisor productivity is defined as full service gross production divided by average number of total financial advisors.
(6) Client balances are defined as deposits, assets under management, client brokerage assets and other assets in custody.
(7) Results shown are defined by Columbia Management’s calculation using Morningstar’s Overall Rating criteria for 4 & 5 star rating. The assets under management of the Columbia Funds that had a 4 & 5 star rating were totaled then divided by the assets under management of all the funds in the ranking.

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  35


Bank of America Corporation and Subsidiaries

All Other Results (1)

 

(Dollars in millions)

 

     Nine Months Ended
September 30
          Third
Quarter

2008
    Second
Quarter

2008
    First
Quarter

2008
    Fourth
Quarter

2007
    Third
Quarter

2007
 
     2008     2007               

Net interest income (2)

       $ (6,408 )       $ (5,584 )            $ (2,391 )       $ (2,036 )       $ (1,981 )       $ (2,035 )       $ (1,980 )

Noninterest income:

                   

Card income

     1,796       2,137            537       595       664       680       739  

Equity investment income (loss)

     652       3,467            (326 )     710       268       278       852  

Gains (losses) on sales of debt securities

     349       70            (2 )     131       220       110       7  

All other income (loss)

     (289 )     (325 )          68       (100 )     (257 )     751       (218 )
                                                             

Total noninterest income

     2,508       5,349            277       1,336       895       1,819       1,380  
                                                             

Total revenue, net of interest expense

     (3,900 )     (235 )          (2,114 )     (700 )     (1,086 )     (216 )     (600 )

Provision for credit losses (3)

     (3,542 )     (3,915 )          (1,134 )     (1,195 )     (1,213 )     (1,294 )     (1,290 )

Merger and restructuring charges

     629       270            247       212       170       140       84  

All other noninterest expense

     145       123            (53 )     50       148       (58 )     (410 )
                                                             

Income (loss) before income taxes

     (1,132 )     3,287            (1,174 )     233       (191 )     996       1,016  

Income tax expense (benefit) (2)

     (492 )     959            (517 )     (24 )     49       142       279  
                                                             

Net income (loss)

       $ (640 )       $ 2,328              $ (657 )       $ 257         $ (240 )       $ 854         $ 737  
                                                             
 

Balance sheet

                   
 

Average

                   

Total loans and leases

       $ 103,592         $ 98,815              $ 122,794         $ 86,899         $ 100,874         $ 105,514         $ 103,503  

Total earning assets

     286,697       215,076            320,163       263,703       270,788       272,365       232,709  

Total assets

     361,495       268,665            402,795       336,036       340,108       341,056       284,187  

Total deposits

     57,047       33,992            61,838       51,039       58,209       64,806       34,663  
 

Period end

                   

Total loans and leases

       $ 121,833         $ 101,278              $ 121,833         $ 71,639         $ 95,124         $ 106,694         $ 101,278  

Total earning assets

     295,667       239,338            295,667       256,267       253,007       261,902       239,338  

Total assets

     392,181       297,838            392,181       339,733       339,759       336,659       297,838  

Total deposits

     63,352       35,335            63,352       56,619       57,616       67,162       35,335  

 

 

 

(1) All Other consists of equity investment activities including Principal Investing, Corporate Investments and Strategic Investments, the residual impact of the allowance for credit losses and the cost allocation processes, merger and restructuring charges, intersegment eliminations, and the results of certain businesses that are expected to be or have been sold or are in the process of being liquidated. All Other also includes certain amounts associated with ALM activities, including the residual impact of funds transfer pricing allocation methodologies, amounts associated with the change in the value of derivatives used as economic hedges of interest rate and foreign exchange rate fluctuations that do not qualify for SFAS No. 133 “Accounting for Derivative instruments and Hedging Activities, as amended” hedge accounting treatment, foreign exchange rate fluctuations related to SFAS No. 52, “Foreign Currency Translation” revaluation of foreign-denominated debt issuances, certain gains (losses) on sales of whole mortgage loans, and gains (losses) on sales of debt securities. All Other also includes adjustments to noninterest income and income tax expense to remove the FTE impact of items (primarily low-income housing tax credits) that have been grossed up within noninterest income to a FTE amount in the business segments. In addition, All Other includes the offsetting securitization impact to present Global Consumer and Small Business Banking on a managed basis. (See Exhibit A: Non-GAAP Reconciliations - All Other - Reconciliation on page 47).
(2) Fully taxable-equivalent basis
(3) Provision for credit losses represents provision for credit losses in All Other combined with the Global Consumer and Small Business Banking securitization offset.

Components of Equity Investment Income

 

(Dollars in millions)

 

     Nine Months Ended
September 30
         Third
Quarter

2008
    Second
Quarter

2008
    First
Quarter

2008
   Fourth
Quarter

2007
    Third
Quarter

2007
     2008     2007               

Principal Investing

       $ 279         $ 2,100             $ (29 )       $ 296         $ 12        $ 117         $ 275

Corporate Investments

     (225 )     452           (369 )     112       32      (7 )     112

Strategic and other investments

     598       915           72       302       224      168       465
                                                         

Total equity investment income included in All Other

     652       3,467           (326 )     710       268      278       852

Total equity investment income included in the business segments

     678       280           10       (118 )     786      39       52
                                                         

Total consolidated equity investment income

       $ 1,330         $ 3,747             $ (316 )       $ 592         $ 1,054        $ 317         $ 904
                                                         

 

 

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  36


Bank of America Corporation and Subsidiaries

Outstanding Loans and Leases

 

(Dollars in millions)

 

     September 30
2008
   June 30
2008
   Increase
(Decrease)
 

Consumer

        

Residential mortgage

   $ 256,989    $ 235,472    $ 21,517  

Home equity

   151,938    121,409    30,529  

Discontinued real estate (1) 

   22,081    —      22,081  

Credit card - domestic

   63,012    62,081    931  

Credit card - foreign

   18,338    16,561    1,777  

Direct/Indirect consumer (2) 

   82,849    84,907    (2,058 )

Other consumer (3)

   3,680    3,859    (179 )
                

Total consumer

   598,887    524,289    74,598  
                

Commercial

        

Commercial - domestic (4)

   219,303    220,610    (1,307 )

Commercial real estate (5)

   63,736    62,897    839  

Commercial lease financing

   22,416    22,815    (399 )

Commercial - foreign

   32,951    34,839    (1,888 )
                

Total commercial loans excluding loans measured at fair value

   338,406    341,161    (2,755 )

Commercial loans measured at fair value (6)

   5,383    5,014    369  
                

Total commercial

   343,789    346,175    (2,386 )
                

Total loans and leases

   $ 942,676    $ 870,464    $ 72,212  
                

 

 

(1) At September 30, 2008, includes $20.1 billion of pay option loans and $1.9 billion of subprime mortgage and home equity loans acquired in connection with the acquisition of Countrywide which the Corporation will no longer originate such types of loans.
(2) Includes foreign consumer loans of $2.4 billion and $2.9 billion at September 30, 2008 and June 30, 2008.
(3) Includes consumer finance loans of $2.7 billion and $2.8 billion, and other foreign consumer loans of $736 million and $839 million at September 30, 2008 and June 30, 2008.
(4) Includes small business commercial - domestic loans, primarily card related, of $19.4 billion and $19.9 billion at September 30, 2008 and June 30, 2008.
(5) Includes domestic commercial real estate loans of $62.7 billion and $61.8 billion, and foreign commercial real estate loans of $1.0 billion and $1.1 billion at September 30, 2008 and June 30, 2008.
(6) Certain commercial loans are measured at fair value in accordance with SFAS 159 and include commercial - domestic loans of $4.0 billion and $3.5 billion, commercial - foreign loans of $1.2 billion and $1.3 billion, and commercial real estate loans of $213 million and $176 million at September 30, 2008 and June 30, 2008.

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  37


Bank of America Corporation and Subsidiaries

Quarterly Average Loans and Leases by Business Segment

 

(Dollars in millions)

 

     Third Quarter 2008  
     Total Corporation        Global Consumer and
Small Business
Banking (1)
   Global Corporate
and Investment
Banking
   Global Wealth
and Investment
Management
   All Other (1)  

Consumer

                

Residential mortgage

   $260,748        $    24,847    $        616    $35,050    $200,235  

Home equity

   151,142        119,736    887    23,644    6,875  

Discontinued real estate

   22,031        —      —      —      22,031  

Credit card - domestic

   63,414        153,037    —      —      (89,623 )

Credit card - foreign

   17,075        33,372    —      —      (16,297 )

Direct/Indirect consumer

   85,392        38,860    42,205    5,012    (685 )

Other consumer

   3,723        1,096    18    18    2,591  
                              

Total consumer

   603,525        370,948    43,726    63,724    125,127  
 

Commercial

                  

Commercial - domestic

   224,117        20,504    181,204    22,707    (298 )

Commercial real estate

   63,220        355    61,139    1,740    (14 )

Commercial lease financing

   22,585        —      24,608    —      (2,023 )

Commercial - foreign

   33,467        1,566    31,817    82    2  
                              

Total commercial

   343,389        22,425    298,768    24,529    (2,333 )
                              

Total loans and leases

   $946,914        $393,373    $342,494    $88,253    $122,794  
                              
     Second Quarter 2008  
     Total Corporation        Global Consumer and
Small Business
Banking (1)
   Global Corporate
and Investment
Banking
   Global Wealth
and Investment
Management
   All Other (1)  

Consumer

                

Residential mortgage

   $256,164        $    30,454    $        621    $35,469    $189,620  

Home equity

   120,265        90,767    892    23,250    5,356  

Discontinued real estate

   —          —      —      —      —    

Credit card - domestic

   61,655        152,613    —      —      (90,958 )

Credit card - foreign

   16,566        33,045    —      —      (16,479 )

Direct/Indirect consumer

   82,593        37,812    40,344    5,255    (818 )

Other consumer

   3,953        1,060    20    30    2,843  
                              

Total consumer

   541,196        345,751    41,877    64,004    89,564  
 

Commercial

                  

Commercial - domestic

   219,537        20,026    178,153    21,923    (565 )

Commercial real estate

   62,810        462    60,812    1,564    (28 )

Commercial lease financing

   22,276        —      24,368    —      (2,092 )

Commercial - foreign

   32,820        1,600    31,118    82    20  
                              

Total commercial

   337,443        22,088    294,451    23,569    (2,665 )
                              

Total loans and leases

   $878,639        $367,839    $336,328    $87,573    $  86,899  
                              
     Third Quarter 2007  
     Total Corporation        Global Consumer and
Small Business
Banking (1)
   Global Corporate
and Investment
Banking
   Global Wealth
and Investment
Management
   All Other (1)  

Consumer

                

Residential mortgage

   $274,385        $  36,072    $    1,084    $31,347    $205,882  

Home equity

   98,611        72,381    951    21,709    3,570  

Discontinued real estate

   —          —      —      —      —    

Credit card - domestic

   57,491        142,370    —      —      (84,879 )

Credit card - foreign

   11,995        29,633    —      —      (17,638 )

Direct/Indirect consumer

   72,978        30,986    40,955    4,816    (3,779 )

Other consumer

   4,322        1,070    16    21    3,215  
                              

Total consumer

   519,782        312,512    43,006    57,893    106,371  
 

Commercial

                  

Commercial - domestic

   176,554        17,700    141,718    18,012    (876 )

Commercial real estate

   38,977        103    37,808    1,044    22  

Commercial lease financing

   20,044        —      22,169    —      (2,125 )

Commercial - foreign

   25,159        1,359    23,593    96    111  
                              

Total commercial

   260,734        19,162    225,288    19,152    (2,868 )
                              

Total loans and leases

   $780,516        $331,674    $268,294    $77,045    $103,503  
                              

 

 

(1) Global Consumer and Small Business Banking, specifically Card Services, is presented on a managed basis with a corresponding offset recorded in All Other.

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  38


Bank of America Corporation and Subsidiaries

Commercial Credit Exposure by Industry (1, 2, 3)

 

(Dollars in millions)

 

     Commercial Utilized     Total Commercial Committed  
     September 30
2008
   June 30
2008
   Increase
(Decrease)
    September 30
2008
    June 30
2008
    Increase
(Decrease)
 

Real estate (4)

   $  77,955    $  77,070    $     885     $105,287     $106,265     $    (978 )

Diversified financials

   49,917    44,603    5,314     99,909     95,325     4,584  

Government and public education

   35,716    34,620    1,096     55,841     56,727     (886 )

Capital goods

   27,904    29,764    (1,860 )   53,006     55,730     (2,724 )

Retailing

   32,372    32,223    149     52,332     52,982     (650 )

Healthcare equipment and services

   27,479    26,938    541     44,189     44,027     162  

Consumer services

   27,469    27,729    (260 )   42,967     43,415     (448 )

Materials

   22,139    23,026    (887 )   37,529     38,508     (979 )

Individuals and trusts

   24,071    23,661    410     34,067     34,467     (400 )

Commercial services and supplies

   21,698    22,874    (1,176 )   31,773     32,878     (1,105 )

Banks

   25,636    23,845    1,791     30,699     35,349     (4,650 )

Food, beverage and tobacco

   14,899    15,727    (828 )   28,624     27,087     1,537  

Energy

   12,226    15,628    (3,402 )   23,557     27,790     (4,233 )

Media

   8,690    8,105    585     19,966     20,166     (200 )

Utilities

   7,549    7,205    344     18,998     19,432     (434 )

Transportation

   12,569    12,667    (98 )   18,258     18,462     (204 )

Insurance

   9,377    9,571    (194 )   16,924     17,752     (828 )

Religious and social organizations

   9,020    8,717    303     12,191     11,944     247  

Technology hardware and equipment

   3,889    4,384    (495 )   10,871     10,827     44  

Consumer durables and apparel

   6,100    6,669    (569 )   10,798     11,626     (828 )

Software and services

   4,268    4,724    (456 )   10,130     9,795     335  

Pharmaceuticals and biotechnology

   3,326    4,164    (838 )   9,336     10,226     (890 )

Telecommunication services

   3,851    4,394    (543 )   8,214     9,305     (1,091 )

Food and staples retailing

   3,934    4,010    (76 )   6,504     6,577     (73 )

Automobiles and components

   2,788    2,744    44     5,726     6,253     (527 )

Household and personal products

   1,168    1,020    148     2,935     2,891     44  

Semiconductors and semiconductor equipment

   1,036    1,180    (144 )   1,782     1,920     (138 )

Other

   7,399    7,224    175     7,975     7,892     83  
                                  

Total commercial credit exposure by industry

   $484,445    $484,486    $      (41 )   $800,388     $815,618     $(15,230 )

Net credit default protection purchased on total commitments (5)

           $  (8,914 )   $   (9,302 )  

 

 

(1) Includes loans and leases, standby letters of credit and financial guarantees, derivative assets, assets held-for-sale, commercial letters of credit, bankers’ acceptances, securitized assets, foreclosed properties and other collateral acquired. Derivative assets are reported on a mark-to-market basis and have been reduced by the amount of cash collateral applied of $18.1 billion and $16.5 billion at September 30, 2008 and June 30, 2008. In addition to cash collateral, derivative assets are also collateralized by $4.0 billion and $5.9 billion of primarily other marketable securities at September 30, 2008 and June 30, 2008 for which the credit risk has not been reduced.
(2) Total commercial utilized and total commercial committed exposure includes loans and letters of credit measured at fair value in accordance with SFAS 159 and are comprised of loans outstanding of $5.4 billion and $5.0 billion and issued letters of credit at notional value of $1.3 billion and $1.4 billion at September 30, 2008 and June 30, 2008. In addition, total commercial committed exposure includes unfunded loan commitments at notional value of $16.0 billion and $17.3 billion at September 30, 2008 and June 30, 2008.
(3) Includes small business commercial - domestic exposure.
(4) Industries are viewed from a variety of perspectives to best isolate the perceived risks. For purposes of this table, the real estate industry is defined based upon the borrowers’ or counterparties’ primary business activity using operating cash flow and primary source of repayment as key factors.
(5) Represents net notional credit protection purchased.

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  39


Bank of America Corporation and Subsidiaries

Net Credit Default Protection by Maturity Profile (1) 

 

 

     September 30
2008
         June 30
2008
     

Less than or equal to one year

   (4 )   %    (3 )   %

Greater than one year and less than or equal to five years

   94        87    

Greater than five years

   10          16      

Total net credit default protection

   100     %    100     %

 

(1) In order to mitigate the cost of purchasing ideal levels of credit protection, credit exposure can be added by selling credit protection. The distribution of maturities for net credit default protection purchased is shown as positive percentages and the distribution of maturities for net credit protection sold as negative percentages.

Net Credit Default Protection by Credit Exposure Debt Rating (1) 

 

(Dollars in millions)

 

     September 30, 2008          June 30, 2008      

Ratings

   Net Notional     Percent          Net Notional     Percent      

AAA

   $     48     (0.5 )   %    $       4     —       %

AA

   (51 )   0.6        (66 )   0.7    

A

   (3,269 )   36.7        (3,687 )   39.6    

BBB

   (4,186 )   47.0        (4,413 )   47.5    

BB

   (1,368 )   15.3        (1,388 )   14.9    

B

   (194 )   2.2        (175 )   1.9    

CCC and below

   (55 )   0.6        (85 )   0.9    

NR (2)

   161     (1.9 )        508     (5.5 )    

Total net credit default protection

   $(8,914 )   100.0     %    $(9,302 )   100.0     %

 

(1) In order to mitigate the cost of purchasing credit protection, credit exposure can be added by selling credit protection. The distribution of debt rating for net notional credit default protection purchased is shown as a negative and the net notional credit protection sold is shown as a positive amount.
(2) In addition to unrated names, “NR” includes $200 million and $550 million in net credit default swap index positions at September 30, 2008 and at June 30, 2008. While index positions are principally investment grade, credit default swaps indices include names in and across each of the ratings categories.

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  40


Bank of America Corporation and Subsidiaries

Selected Emerging Markets (1)

 

(Dollars in millions)

 

    Loans and
Leases, and Loan
Commitments
  Other
Financing (2)
  Derivative
Assets (3)
  Securities/
Other
Investments (4)
  Total
Cross–border
Exposure (5)
  Local
Country
Exposure

Net of Local
Liabilities (6)
  Total
Emerging
Markets

Exposure
September 30,

2008
  Increase
(Decrease)

from
June 30,
2008
 

Region/Country

               

Asia Pacific

               

China (7)

  $   304   $   410   $   508   $14,723   $15,945   $    1   $15,946   $(1,014 )

South Korea

  359   1,342   1,607   1,648   4,956   —     4,956   (128 )

India

  1,797   835   806   1,107   4,545   —     4,545   318  

Singapore

  417   81   381   296   1,175   —     1,175   115  

Taiwan

  318   34   110   143   605   378   983   (506 )

Hong Kong

  434   55   44   87   620   —     620   (91 )

Other Asia Pacific (8)

  166   137   35   350   688   —     688   63  

Total Asia Pacific

  3,795   2,894   3,491   18,354   28,534   379   28,913   (1,243 )

Latin America

               

Brazil (9)

  874   220   20   3,713   4,827   208   5,035   (833 )

Mexico (10)

  1,422   315   36   3,116   4,889   95   4,984   (107 )

Chile

  577   45   15   12   649   6   655   53  

Other Latin America (8)

  316   267   12   126   721   135   856   35  

Total Latin America

  3,189   847   83   6,967   11,086   444   11,530   (852 )

Middle East and Africa

               

Bahrain

  297   7   20   907   1,231   —     1,231   738  

Other Middle East and Africa (8)

  787   181   247   92   1,307   —     1,307   (7 )

Total Middle East and Africa

  1,084   188   267   999   2,538   —     2,538   731  

Central and Eastern Europe (8)

  58   190   103   88   439   —     439   113  

Total emerging market exposure

  $8,126   $4,119   $3,944   $26,408   $42,597   $823   $43,420   $(1,251 )

 

(1) There is no generally accepted definition of emerging markets. The definition that we use includes all countries in Asia Pacific excluding Japan, Australia and New Zealand; all countries in Latin America excluding Cayman Islands and Bermuda; all countries in Middle East and Africa; and all countries in Central and Eastern Europe excluding Greece. There was no emerging market exposure included in the portfolio measured at fair value in accordance with SFAS 159 at September 30, 2008 and June 30, 2008.
(2) Includes acceptances, standby letters of credit, commercial letters of credit and formal guarantees.
(3) Derivative assets are reported on a mark-to-market basis and have been reduced by the amount of cash collateral applied of $89 million and $77 million at September 30, 2008 and June 30, 2008. At September 30, 2008 and June 30, 2008, there were $334 million and $98 million of other marketable securities collateralizing derivative assets for which credit risk has not been reduced.
(4) Generally, cross-border resale agreements are presented based on the domicile of the counterparty, consistent with Federal Financial Institutions Examination Council (FFIEC) reporting rules. Cross- border resale agreements where the underlying securities are U.S. Treasury securities, in which case the domicile is the U.S., are excluded from this presentation.
(5) Cross-border exposure includes amounts payable to the Corporation by borrowers or counterparties with a country of residence other than the one in which the credit is booked, regardless of the currency in which the claim is denominated, consistent with FFIEC reporting rules.
(6) Local country exposure includes amounts payable to the Corporation by borrowers with a country of residence in which the credit is booked, regardless of the currency in which the claim is denominated. Local funding or liabilities are subtracted from local exposures as allowed by the FFIEC. Total amount of available local liabilities funding local country exposure at September 30, 2008 was $17.6 billion compared to $16.9 billion at June 30, 2008. Local liabilities at September 30, 2008 in Asia Pacific and Latin America were $17.1 billion and $508 million, of which $6.6 billion were in Hong Kong, $5.0 billion in Singapore, $2.1 billion in South Korea, $1.1 billion in India, $1.0 billion in China, and $586 million in Taiwan. There were no other countries with available local liabilities funding local country exposure greater than $500 million.
(7) Securities/Other Investments include an investment of $14.5 billion in China Construction Bank (CCB).
(8) No country included in Other Asia Pacific, Other Latin America, Other Middle East and Africa, or Central and Eastern Europe had total foreign exposure of more than $500 million.
(9) Securities/Other Investments include an investment of $3.6 billion in Banco Itaú Holding Financeira S.A.
(10) Securities/Other Investments include an investment of $2.9 billion in Grupo Financiero Santander, S.A.

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  41


Bank of America Corporation and Subsidiaries

Nonperforming Assets

 

(Dollars in millions)

 

     September 30
2008
       June 30
2008
       March 31
2008
       December 31
2007
       September 30
2007
   

Residential mortgage

   $  4,638      $  3,269      $  2,576      $  1,999      $  1,176  

Home equity

   2,049      1,851      1,786      1,340      764  

Discontinued real estate

   33      —        —        —        —    

Direct/Indirect consumer

   13      11      6      8      6  

Other consumer

   89      89      91      95      94  
                                  

Total consumer

   6,822      5,220      4,459      3,442      2,040  
                                  

Commercial - domestic (1)

   1,566      1,079      980      852      638  

Commercial real estate

   3,090      2,616      1,627      1,099      352  

Commercial lease financing

   35      40      44      33      29  

Commercial - foreign

   48      48      54      19      16  
                                  
   4,739      3,783      2,705      2,003      1,035  

Small business commercial - domestic

   183      153      169      152      105  
                                  

Total commercial

   4,922      3,936      2,874      2,155      1,140  
                                  

Total nonperforming loans and leases

   11,744      9,156      7,333      5,597      3,180  

Foreclosed properties

   1,832      593      494      351      192  
                                  

Total nonperforming assets (2, 3, 4, 5)

   $13,576      $  9,749      $  7,827      $  5,948      $  3,372  
                                  

Loans past due 90 days or more and still accruing (2, 4, 6)

   $4,819      $  4,548      $  4,160      $3,736      $  2,955  

Nonperforming assets/Total assets (5, 7)

   0.74   %    0.57   %    0.45   %    0.35   %    0.21   %

Nonperforming assets/Total loans, leases and foreclosed properties (5, 7)

   1.45      1.13      0.90      0.68      0.43  

Nonperforming loans and leases/Total loans and leases outstanding (7)

   1.25      1.06      0.84      0.64      0.40  

Allowance for credit losses:

                        

Allowance for loan and lease losses

   $20,346      $17,130      $14,891      $11,588      $  9,535  

Reserve for unfunded lending commitments

   427      507      507      518      392  
                                  

Total allowance for credit losses

   $20,773      $17,637      $15,398      $12,106      $  9,927  
                                  

Allowance for loan and lease losses/Total loans and leases outstanding (7)

   2.17   %    1.98   %    1.71   %    1.33   %    1.21   %

Allowance for loan and lease losses/Total nonperforming loans and leases (7)

   173      187      203      207      300  

Commercial utilized criticized exposure (8)

   $33,837      $28,322      $22,720      $17,544      $10,803  

Commercial utilized criticized exposure/Commercial utilized exposure (8)

   7.32   %    6.16   %    5.16   %    4.18   %    3.06   %

 

 

(1) Excludes small business commercial - domestic loans.
(2) Balances do not include loans accounted for in accordance with SOP 03-3 even though the customer may be contractually past due. Loans accounted for in accordance with SOP 03-3 were written down to fair value upon acquisition and accrete interest income over the remaining life of the loan.
(3) Balances do not include nonperforming loans held-for-sale included in other assets of $848 million, $388 million, $327 million, $188 million and $93 million at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007 and September 30, 2007, respectively.
(4) Balances do not include loans measured at fair value in accordance with SFAS 159. At September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007 and September 30, 2007, there were no nonperforming loans measured at fair value in accordance with SFAS 159. At June 30, 2008, there were $81 million of loans past due 90 days or more and still accruing interest measured at fair value in accordance with SFAS 159. At September 30, 2008, March 31, 2008, December 31, 2007 and September 30, 2007, there were no loans past due 90 days or more and still accruing interest measured at fair value in accordance with SFAS 159.
(5) Balances and ratios do not include nonperforming available-for-sale debt securities of $436 million, $676 million, $789 million, $180 million and $24 million at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007 and September 30, 2007, respectively. Including nonperforming available-for-sale debt securities, nonperforming assets as a percentage of total assets would have been 0.77 percent, 0.61 percent, 0.50 percent, 0.36 percent and 0.22 percent at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007 and September 30, 2007, respectively.
(6) Balances do not include loans held-for-sale past due 90 days or more and still accruing interest included in other assets of $138 million, $32 million, $69 million, $79 million and $8 million at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007 and September 30, 2007, respectively.
(7) Ratios do not include loans measured at fair value in accordance with SFAS 159 of $5.4 billion, $5.0 billion, $5.1 billion, $4.6 billion and $4.5 billion at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007 and September 30, 2007, respectively.
(8) Criticized exposure and ratios exclude assets held-for-sale and exposure measured at fair value in accordance with SFAS 159. Including assets held-for-sale and commercial loans measured at fair value, the ratios would have been 7.94 percent, 6.62 percent, 6.12 percent, 4.77 percent and 3.66 percent at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007 and September 30, 2007, respectively.

Loans are classified as domestic or foreign based upon the domicile of the borrower.

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  42


Bank of America Corporation and Subsidiaries

Quarterly Net Charge-offs/Losses and Net Charge-off/Loss Ratios (1, 2)

 

(Dollars in millions)

 

     Third
Quarter
2008
    Second
Quarter
2008
    First
Quarter
2008
    Fourth
Quarter
2007
    Third
Quarter
2007
 
Held Basis    Amount     Percent     Amount     Percent     Amount     Percent     Amount     Percent     Amount     Percent  

Residential mortgage

   $   242     0.37 %   $   151     0.24 %   $    66     0.10 %   $    27     0.04 %   $    13     0.02 %

Home equity

   964     2.53     923     3.09     496     1.71     179     0.63     50     0.20  

Discontinued real estate

   (3 )   (0.05 )   —       —       —       —       —       —       —       —    

Credit card - domestic

   1,094     6.86     976     6.36     847     5.39     738     4.87     712     4.91  

Credit card - foreign

   148     3.46     132     3.21     109     2.87     108     2.99     96     3.19  

Direct/Indirect consumer

   845     3.94     660     3.22     555     2.84     456     2.41     353     1.92  

Other consumer

   106     11.36     83     8.47     86     8.61     96     9.08     78     7.18  
                                        

Total consumer

   3,396     2.24     2,925     2.17     2,159     1.58     1,604     1.17     1,302     0.99  
                                        

Commercial - domestic (3)

   117     0.23     70     0.14     77     0.16     64     0.13     11     0.03  

Commercial real estate

   262     1.65     136     0.88     107     0.70     17     0.12     28     0.28  

Commercial lease financing

   8     0.13     6     0.11     15     0.27     17     0.31     (3 )   (0.07 )

Commercial - foreign

   46     0.56     5     0.06     (7 )   (0.10 )   2     0.03     (4 )   (0.06 )
                                        
   433     0.54     217     0.28     192     0.25     100     0.13     32     0.05  

Small business commercial - domestic

   527     10.64     477     9.59     364     7.44     281     5.92     239     5.38  
                                        

Total commercial

   960     1.13     694     0.84     556     0.69     381     0.47     271     0.42  
                                        

Total net charge-offs

   $4,356     1.84     $3,619     1.67     $2,715     1.25     $1,985     0.91     $1,573     0.80  
                                        

By Business Segment

                    

Global Consumer and Small Business Banking (4)

   $5,169     5.23 %   $4,721     5.16 %   $3,693     4.10 %   $3,033     3.42 %   $2,687     3.17 %

Global Corporate and Investment Banking

   604     0.71     318     0.39     328     0.41     214     0.26     114     0.17  

Global Wealth and Investment Management

   108     0.49     92     0.42     52     0.24     28     0.13     16     0.08  

All Other (4)

   (1,525 )   (4.94 )   (1,512 )   (7.00 )   (1,358 )   (5.41 )   (1,290 )   (4.85 )   (1,244 )   (4.77 )
                                        

Total net charge-offs

   $4,356     1.84     $3,619     1.67     $2,715     1.25     $1,985     0.91     $1,573     0.80  
                                        

Supplemental managed basis data

                    

Credit card - domestic

   $2,643     6.87 %   $2,414     6.36 %   $2,068     5.48 %   $1,816     4.90 %   $1,707     4.76 %

Credit card - foreign

   353     4.21     337     4.11     304     3.84     322     4.06     317     4.24  
                                        

Total credit card managed net losses

   $2,996     6.40     $2,751     5.96     $2,372     5.19     $2,138     4.75     $2,024     4.67  
                                        

 

 

(1) Net charge-off/loss ratios are calculated as annualized held net charge-offs or managed net losses divided by average outstanding held or managed loans and leases excluding loans measured at fair value in accordance with SFAS 159 during the period for each loan and lease category.
(2) Net charge-offs include the impact of SOP 03-3 which decreased net charge-offs on residential mortgage $283 million, home equity $768 million, discontinued real estate $943 million, commercial - domestic $14 million, commercial real estate $17 million and small business commercial - domestic $2 million for the three months ended September 30, 2008; on residential mortgage $3 million, home equity $4 million, commercial - domestic $3 million, commercial real estate $8 million and small business commercial - domestic $2 million for the three months ended June 30, 2008; on residential mortgage $2 million, home equity $3 million, commercial - domestic $3 million, commercial real estate $8 million and small business commercial - domestic $3 million for the three months ended March 31, 2008; and on residential mortgage $2 million, home equity $8 million, direct/indirect consumer $2 million, commercial - domestic $29 million, commercial real estate $27 million, commercial lease financing $2 million and small business commercial - domestic $5 million for the three months ended December 31, 2007. The impact of SOP 03-3 was not material for the three months ended September 30, 2007.
(3) Excludes small business commercial - domestic loans.
(4) Global Consumer and Small Business Banking is presented on a managed basis, specifically Card Services. The securitization offset is included within All Other.

Loans are classified as domestic or foreign based upon the domicile of the borrower.

Certain prior period amounts have been reclassified to conform to current period presentation.

LOGO

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  43


Bank of America Corporation and Subsidiaries

Year-to-Date Net Charge-offs/Losses and Net Charge-off/Loss Ratios (1, 2)

 

(Dollars in millions)

 

     Nine Months Ended September 30  
     2008     2007  
Held Basis    Amount     Percent     Amount     Percent  

Residential mortgage

   $    459     0.23  %   $     30     0.02  %

Home equity

   2,383     2.46     95     0.13  

Discontinued real estate

   (3 )   (0.05 )   —       —    

Credit card - domestic

   2,917     6.20     2,325     5.44  

Credit card - foreign

   389     3.19     270     3.09  

Direct/Indirect consumer

   2,060     3.35     917     1.75  

Other consumer

   275     9.45     182     5.78  
                

Total consumer

   8,480     2.01     3,819     1.02  
                

Commercial - domestic (3)

   264     0.18     64     0.06  

Commercial real estate

   505     1.08     30     0.11  

Commercial lease financing

   29     0.17     (15 )   (0.10 )

Commercial - foreign

   44     0.18     (1 )   (0.01 )
                
   842     0.36     78     0.04  

Small business commercial - domestic

   1,368     9.23     598     4.82  
                

Total commercial

   2,210     0.89     676     0.37  
                

Total net charge-offs

   $10,690     1.59     $ 4,495     0.80  
                

By Business Segment:

        

Global Consumer and Small Business Banking (4)

   $13,583     4.84  %   $ 7,782     3.22  %

Global Corporate and Investment Banking

   1,250     0.51     290     0.15  

Global Wealth and Investment Management

   252     0.39     38     0.07  

All Other (4)

   (4,395 )   (5.67 )   (3,615 )   (4.89 )
                

Total net charge-offs

   $10,690     1.59     $ 4,495     0.80  
                

Supplemental managed basis data

        

Credit card - domestic

   $  7,125     6.24  %   $ 5,144     4.91  %

Credit card - foreign

   994     4.06     932     4.31  
                

Total credit card managed net losses

   $  8,119     5.85     $ 6,076     4.81  
                

 

 

(1) Net charge-off/loss ratios are calculated as annualized held net charge-offs or managed net losses divided by average outstanding held or managed loans and leases excluding loans measured at fair value in accordance with SFAS 159 during the period for each loan and lease category.
(2) Net charge-offs include the impact of SOP 03-3 which decreased net charge-offs on residential mortgage $288 million, home equity $775 million, discontinued real estate $943 million, commercial - domestic $20 million, commercial real estate $33 million and small business commercial - domestic $7 million for the nine months ended September 30, 2008. The impact of SOP 03-3 was not material for the nine months ended September 30, 2007.
(3) Excludes small business commercial - domestic loans.
(4) Global Consumer and Small Business Banking is presented on a managed basis, specifically Card Services. The securitization offset is included within
     All Other.

Loans are classified as domestic or foreign based upon the domicile of the borrower.

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  44


Bank of America Corporation and Subsidiaries

Allocation of the Allowance for Credit Losses by Product Type

 

(Dollars in millions)

 

     September 30
2008
   June 30
2008
   September 30
2007
    
Allowance for loan and lease losses    Amount    Percent of loans
and leases
outstanding (1)
        Amount    Percent of loans
and leases
outstanding (1)
        Amount    Percent of loans
and leases
outstanding (1)
    

Residential mortgage

   $  1,376    0.54    %    $    792    0.34    %    $   201    0.07    %

Home equity

   4,744    3.12       3,812    3.14       402    0.40   

Discontinued real estate

   82    0.37       —      —         —      —     

Credit card - domestic

   3,624    5.75       3,210    5.17       2,751    4.69   

Credit card - foreign

   633    3.45       474    2.86       345    2.66   

Direct/Indirect consumer

   3,742    4.52       2,964    3.49       1,743    2.36   

Other consumer

   184    5.02       185    4.81       157    3.64   
                                

Total consumer

   14,385    2.40       11,437    2.18       5,599    1.07   
                                

Commercial - domestic (2)

   4,072    1.86       3,844    1.74       2,764    1.56   

Commercial real estate

   1,376    2.16       1,333    2.12       644    1.60   

Commercial lease financing

   210    0.94       199    0.87       186    0.91   

Commercial - foreign

   303    0.92       317    0.91       342    1.21   
                                

Total commercial (3)

   5,961    1.76       5,693    1.67       3,936    1.48   
                                

Allowance for loan and lease losses

   20,346    2.17       17,130    1.98       9,535    1.21   

Reserve for unfunded lending commitments

   427          507          392      
                                

Allowance for credit losses

   $20,773          $17,637          $9,927      
                                

 

 

(1) Ratios are calculated as allowance for loan and lease losses as a percentage of loans and leases outstanding excluding loans measured at fair value in accordance with SFAS 159 for each loan and lease category. Loans measured at fair value include commercial - domestic loans of $4.0 billion, $3.5 billion and $3.6 billion, commercial - foreign loans of $1.2 billion, $1.3 billion and $672 million, and commercial real estate loans of $213 million, $176 million and $224 million at September 30, 2008, June 30, 2008 and September 30, 2007.
(2) Includes allowance for small business commercial - domestic loans of $561 billion, $2.1 billion and $1.2 billion at September 30, 2008, June 30, 2008 and September 30, 2007.
(3) Includes allowance for loan and lease losses for impaired commercial loans of $561 million, $417 million and $88 million at September 30, 2008, June 30, 2008 and September 30, 2007.

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  45


Exhibit A: Non-GAAP Reconciliations

Bank of America Corporation and Subsidiaries

Global Consumer and Small Business Banking - Reconciliation

 

(Dollars in millions)

 

     Nine Months Ended September 30, 2008    Nine Months Ended September 30, 2007    Third Quarter 2008
     Managed
Basis (1)
   Securitization
Impact (2)
    Held
Basis
   Managed
Basis (1)
   Securitization
Impact (2)
    Held
Basis
   Managed
Basis (1)
   Securitization
Impact (2)
    Held
Basis

Net interest income (3)

   $ 24,636    $   (6,402 )   $ 18,234    $21,378    $(5,956 )   $ 15,422    $8,938    $(2,207 )   $6,731

Noninterest income:

                       

Card income

   7,583    1,768     9,351    7,567    2,528     10,095    2,296    507     2,803

Service charges

   5,130    —       5,130    4,385    —       4,385    1,822    —       1,822

Mortgage banking income

   2,820    —       2,820    842    —       842    1,756    —       1,756

Insurance premiums

   1,203    (152 )   1,051    662    (193 )   469    709    (44 )   665

All other income

   1,120    (28 )   1,092    497    (28 )   469    408    (10 )   398
                                               

Total noninterest income

   17,856    1,588     19,444    13,953    2,307     16,260    6,991    453     7,444
                                               

Total revenue, net of interest expense

   42,492    (4,814 )   37,678    35,331    (3,649 )   31,682    15,929    (1,754 )   14,175

Provision for credit losses

   19,655    (4,814 )   14,841    8,626    (3,649 )   4,977    6,655    (1,754 )   4,901

Noninterest expense

   17,820    —       17,820    14,793    —       14,793    7,275    —       7,275
                                               

Income before income taxes

   5,017    —       5,017    11,912    —       11,912    1,999    —       1,999

Income tax expense (3)

   1,849    —       1,849    4,393    —       4,393    765    —       765
                                               

Net income

   $   3,168    $       —       $  3,168    $  7,519    $   —       $   7,519    $1,234    $   —       $1,234
                                               

Balance sheet

                       

Average - total loans and leases

   $374,494    $(106,177 )   $268,317    $319,123    $(102,675 )   $216,448    $393,373    $(105,919 )   $287,454

Period end - total loans and leases

   392,219    (102,049 )   290,170    337,792    (103,542 )   234,250    392,219    (102,049 )   290,170
     Second Quarter 2008    First Quarter 2008    Fourth Quarter 2007
     Managed
Basis (1)
   Securitization
Impact (2)
    Held
Basis
   Managed
Basis (1)
   Securitization
Impact (2)
    Held
Basis
   Managed
Basis (1)
   Securitization
Impact (2)
    Held
Basis

Net interest income (3)

   $   8,018    $  (2,140 )   $   5,878    $   7,680    $   (2,055 )   $   5,625    $  7,444    $   (2,071 )   $   5,373

Noninterest income:

                       

Card income

   2,560    557     3,117    2,727    704     3,431    2,627    828     3,455

Service charges

   1,743    —       1,743    1,565    —       1,565    1,623    —       1,623

Mortgage banking income

   409    —       409    655    —       655    490    —       490

Insurance premiums

   253    (52 )   201    241    (56 )   185    250    (57 )   193

All other income

   208    (9 )   199    504    (9 )   495    200    (10 )   190
                                               

Total noninterest income

   5,173    496     5,669    5,692    639     6,331    5,190    761     5,951
                                               

Total revenue, net of interest expense

   13,191    (1,644 )   11,547    13,372    (1,416 )   11,956    12,634    (1,310 )   11,324

Provision for credit losses

   6,545    (1,644 )   4,901    6,455    (1,416 )   5,039    4,296    (1,310 )   2,986

Noninterest expense

   5,363    —       5,363    5,182    —       5,182    5,578    —       5,578
                                               

Income before income taxes

   1,283    —       1,283    1,735    —       1,735    2,760    —       2,760

Income tax expense (3)

   452    —       452    632    —       632    862    —       862
                                               

Net income

   $    831    $      —       $     831    $    1,103    $       —       $   1,103    $   1,898    $      —       $   1,898
                                               

Balance sheet

                       

Average - total loans and leases

   $367,839    $(107,438 )   $260,401    $362,062    $(105,176 )   $256,886    $352,167    $(105,091 )   $247,076

Period end - total loans and leases

   364,608    (108,521 )   256,087    363,355    (107,847 )   255,508    359,008    (102,967 )   256,041
     Third Quarter 2007                                
     Managed
Basis (1)
   Securitization
Impact (2)
    Held
Basis
                               

Net interest income (3)

   $7,257    $(2,085 )   $5,172                

Noninterest income:

                       

Card income

   2,588    896     3,484                

Service charges

   1,519    —       1,519                

Mortgage banking income

   243    —       243                

Insurance premiums

   266    (58 )   208                

All other income

   202    (12 )   190                
                               

Total noninterest income

   4,818    826     5,644                
                               

Total revenue, net of interest expense

   12,075    (1,259 )   10,816                

Provision for credit losses

   3,122    (1,259 )   1,863                

Noninterest expense

   5,281    —       5,281                
                               

Income before income taxes

   3,672    —       3,672                

Income tax expense (3)

   1,359    —       1,359                
                               

Net income

   $2,313    $—       $2,313                
                               

Balance sheet

                       

Average - total loans and leases

   $331,674    $(104,317 )   $227,357                

Period end - total loans and leases

   337,792    (103,542 )   234,250                

 

 

(1) Provision for credit losses represents provision for credit losses on held loans combined with realized credit losses associated with the securitized loan portfolio.
(2) The securitization impact on net interest income is on a funds transfer pricing methodology consistent with the way funding costs are allocated to the businesses.
(3) Fully taxable-equivalent basis

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

The Corporation reports Global Consumer and Small Business Banking’s results, specifically Card Services, on a managed basis. This basis of presentation excludes the Corporation’s securitized mortgage and home equity portfolios for which the Corporation retains servicing. Reporting on a managed basis is consistent with the way that management evaluates the results of Global Consumer and Small Business Banking. Managed basis assumes that securitized loans were not sold and presents earnings on these loans in a manner similar to the way loans that have not been sold (i.e., held loans) are presented. Loan securitization is an alternative funding process that is used by the Corporation to diversify funding sources. Loan securitization removes loans from the Consolidated Balance Sheet through the sale of loans to an off-balance sheet qualified special purpose entity which is excluded from the Corporation’s Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States (GAAP).

The performance of the managed portfolio is important in understanding Global Consumer and Small Business Banking’s and Card Services’ results as it demonstrates the results of the entire portfolio serviced by the business. Securitized loans continue to be serviced by the business and are subject to the same underwriting standards and ongoing monitoring as held loans. In addition, retained excess servicing income is exposed to similar credit risk and repricing of interest rates as held loans. Global Consumer and Small Business Banking’s managed income statement line items differ from a held basis reported as follows:

 

 

Managed net interest income includes Global Consumer and Small Business Banking’s net interest income on held loans and interest income on the securitized loans less the internal funds transfer pricing allocation related to securitized loans.

 

Managed noninterest income includes Global Consumer and Small Business Banking’s noninterest income on a held basis less the reclassification of certain components of card income (e.g., excess servicing income) to record managed net interest income and provision for credit losses. Noninterest income, both on a held and managed basis, also includes the impact of adjustments to the interest-only strip that are recorded in card income as management continues to manage this impact within Global Consumer and Small Business Banking.

 

Provision for credit losses represents the provision for credit losses on held loans combined with realized credit losses associated with the securitized loan portfolio.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  46


Exhibit A: Non-GAAP Reconciliations - continued

Bank of America Corporation and Subsidiaries

All Other - Reconciliation

 

(Dollars in millions)

 

     Nine Months Ended September 30, 2008     Nine Months Ended September 30, 2007     Third Quarter 2008  
     Reported
Basis (1)
    Securitization
Offset (2)
    As Adjusted     Reported
Basis (1)
    Securitization
Offset (2)
    As Adjusted     Reported
Basis (1)
    Securitization
Offset (2)
    As Adjusted  

Net interest income (3)

   $  (6,408 )   $    6,402     $        (6 )   $  (5,584 )   $    5,956     $      372     $  (2,391 )   $    2,207     $(184 )

Noninterest income:

                  

Card income

   1,796     (1,768 )   28     2,137     (2,528 )   (391 )   537     (507 )   30  

Equity investment income (loss)

   652     —       652     3,467     —       3,467     (326 )   —       (326 )

Gains (losses) on sales of debt securities

   349     —       349     70     —       70     (2 )   —       (2 )

All other income (loss)

   (289 )   180     (109 )   (325 )   221     (104 )   68     54     122  
                                                      

Total noninterest income

   2,508     (1,588 )   920     5,349     (2,307 )   3,042     277     (453 )   (176 )
                                                      

Total revenue, net of interest expense

   (3,900 )   4,814     914     (235 )   3,649     3,414     (2,114 )   1,754     (360 )

Provision for credit losses

   (3,542 )   4,814     1,272     (3,915 )   3,649     (266 )   (1,134 )   1,754     620  

Merger and restructuring charges

   629     —       629     270     —       270     247     —       247  

All other noninterest expense

   145     —       145     123     —       123     (53 )   —       (53 )
                                                      

Income (loss) before income taxes

   (1,132 )   —       (1,132 )   3,287     —       3,287     (1,174 )   —       (1,174 )

Income tax expense (benefit) (3)

   (492 )   —       (492 )   959     —       959     (517 )   —       (517 )
                                                      

Net income (loss)

   $     (640 )   $      —       $     (640 )   $    2,328     $      —       $    2,328     $     (657 )   $      —       $(657 )
                                                      
Balance sheet                   

Average - total loans and leases

   $103,592     $106,177     $209,769     $98,815     $102,675     $201,490     $122,794     $105,919     $228,713  

Period end - total loans and leases

   121,833     102,049     223,882     101,278     103,542     204,820     121,833     102,049     223,882  
     Second Quarter 2008     First Quarter 2008     Fourth Quarter 2007  
     Reported
Basis (1)
    Securitization
Offset (2)
    As Adjusted     Reported
Basis (1)
    Securitization
Offset (2)
    As Adjusted     Reported
Basis (1)
    Securitization
Offset (2)
    As Adjusted  

Net interest income (3)

   $  (2,036 )   $    2,140     $      104     $  (1,981 )   $    2,055     $        74     $  (2,035 )   $    2,071     $36  

Noninterest income:

                  

Card income

   595     (557 )   38     664     (704 )   (40 )   680     (828 )   (148 )

Equity investment income

   710     —       710     268     —       268     278     —       278  

Gains on sales of debt securities

   131     —       131     220     —       220     110     —       110  

All other income (loss)

   (100 )   61     (39 )   (257 )   65     (192 )   751     67     818  
                                                      

Total noninterest income

   1,336     (496 )   840     895     (639 )   256     1,819     (761 )   1,058  
                                                      

Total revenue, net of interest expense

   (700 )   1,644     944     (1,086 )   1,416     330     (216 )   1,310     1,094  

Provision for credit losses

   (1,195 )   1,644     449     (1,213 )   1,416     203     (1,294 )   1,310     16  

Merger and restructuring charges

   212     —       212     170     —       170     140     —       140  

All other noninterest expense

   50     —       50     148     —       148     (58 )   —       (58 )
                                                      

Income (loss) before income taxes

   233     —       233     (191 )   —       (191 )   996     —       996  

Income tax expense (benefit) (3)

   (24 )   —       (24 )   49     —       49     142     —       142  
                                                      

Net income (loss)

   $      257     $      —       $      257     $     (240 )   $      —       $     (240 )   $      854     $      —       $854  
                                                      
Balance sheet                   

Average - total loans and leases

   $86,899     $107,438     $194,337     $100,874     $105,176     $206,050     $105,514     $105,091     $210,605  

Period end - total loans and leases

   71,639     108,521     180,160     95,124     107,847     202,971     106,694     102,967     209,661  
     Third Quarter 2007                                      
     Reported
Basis (1)
    Securitization
Offset (2)
    As Adjusted                                      

Net interest income (3)

   $  (1,980 )   $    2,085     $      105              

Noninterest income:

                  

Card income

   739     (896 )   (157 )            

Equity investment income

   852     —       852              

Gains on sales of debt securities

   7     —       7              

All other income (loss)

   (218 )   70     (148 )            
                              

Total noninterest income

   1,380     (826 )   554              
                              

Total revenue, net of interest expense

   (600 )   1,259     659              

Provision for credit losses

   (1,290 )   1,259     (31 )            

Merger and restructuring charges

   84     —       84              

All other noninterest expense

   (410 )   —       (410 )            
                              

Income before income taxes

   1,016     —       1,016              

Income tax expense (3)

   279     —       279              
                              

Net income

   $      737     $      —       $      737              
                              
Balance sheet                   

Average - total loans and leases

   $103,503     $104,317     $207,820              

Period end - total loans and leases

   101,278     103,542     204,820              

 

 

(1) Provision for credit losses represents provision for credit losses in All Other combined with the Global Consumer and Small Business Banking securitization offset.
(2) The securitization offset on net interest income is on a funds transfer pricing methodology consistent with the way funding costs are allocated to the businesses.
(3) Fully taxable-equivalent basis

Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.

 

Information for periods beginning July 1, 2008 includes the Countrywide acquisition; prior periods have not been restated.

This information is preliminary and based on company data available at the time of the presentation.

  47