Current report filing

Business Segment Information

v2.4.0.6
Business Segment Information
 12 Months Ended
Dec. 31, 2011
Segment Reporting Information [Line Items]  
Segment Reporting Disclosure [Text Block]
Business Segment Information
The Corporation reports the results of its operations through five business segments: Consumer & Business Banking (CBB), Consumer Real Estate Services (CRES), Global Banking, Global Markets and Global Wealth & Investment Management (GWIM), with the remaining operations recorded in All Other. Effective January 1, 2012, the Corporation changed the basis of presentation from six to the above five segments. The former Deposits and Card Services segments, as well as Business Banking which was included in the former Global Commercial Banking segment, are now reflected in CBB. The former Global Commercial Banking segment was combined with the Global Corporate and Investment Banking business, which was included in the former Global Banking & Markets (GBAM) segment, to form Global Banking. The remaining global markets business of GBAM is now reported as a separate Global Markets segment. In addition, certain management accounting methodologies and related allocations were refined. Prior period results have been reclassified to conform to current period presentation.
Consumer & Business Banking
CBB offers a diversified range of credit, banking and investment products and services to consumers and businesses. CBB product offerings include traditional savings accounts, money market savings accounts, CDs and IRAs, noninterest- and interest-bearing checking accounts, investment accounts and products as well as credit and debit cards in the U.S. to consumers and small businesses. CBB also offers a wide range of lending-related products and services, integrated working capital management and treasury solutions through a network of offices and client relationship teams along with various product partners to U.S. based companies generally with annual sales of $1 million to $50 million.
During 2011, the Corporation sold its Canadian consumer card business and is evaluating its remaining international consumer card operations. As a result of these actions, the international consumer card business results were moved to All Other and prior periods have been reclassified. 
The Corporation reports its CBB results in accordance with new consolidation guidance that was effective on January 1, 2010. Under this new consolidation guidance, the Corporation consolidated all previously unconsolidated credit card trusts. Accordingly, 2011 and 2010 results are comparable to 2009 results that were presented on a managed basis, which was consistent with the way that management evaluated the results of the business. Managed basis assumed that securitized loans were not sold and presented earnings on these loans in a manner similar to the way loans that have not been sold are presented.
Consumer Real Estate Services
CRES provides an extensive line of consumer real estate products and services to customers nationwide. CRES products include fixed- and adjustable-rate first-lien mortgage loans for home purchase and refinancing needs, HELOC and home equity loans. First mortgage products are either sold into the secondary mortgage market to investors, while retaining MSRs and the Bank of America customer relationships, or are held on the Corporation’s Consolidated Balance Sheet in All Other for ALM purposes. HELOC and home equity loans are retained on the CRES balance sheet. CRES services mortgage loans, including those loans it owns, loans owned by other business segments and All Other, and loans owned by outside investors.
The financial results of the on-balance sheet loans are reported in the business segment that owns the loans or All Other. CRES is not impacted by the Corporation’s first mortgage production retention decisions as CRES is compensated for loans held for ALM purposes on a management accounting basis, with a corresponding offset recorded in All Other, and for servicing loans owned by other business segments and All Other. CRES also includes the impact of transferring customers and their related loan balances between GWIM and CRES based on client segmentation thresholds. Subsequent to the date of transfer, the associated net interest income and noninterest expense are recorded in the business segment to which loans were transferred.
Global Banking
Global Banking provides a wide range of lending-related products and services, integrated working capital management and treasury solutions to clients through the Corporation's network of offices and client relationship teams along with various product partners. Global Banking's lending products and services include commercial loans, leases, commitment facilities, trade finance, real estate lending, asset-based lending and indirect consumer loans. Global Banking's treasury solutions business includes treasury management, foreign exchange and short-term investing options. Global Banking also works with clients to provide investment banking products such as debt and equity underwriting and distribution, merger-related and other advisory services. Underwriting debt and equity issuances, fixed-income and equity research, and certain market-based activities are executed through Global Banking's global broker/dealer affiliates which are its primary dealers in several countries. The economics of certain investment banking and underwriting activities are shared primarily between Global Banking and Global Markets based on the activities performed by each segment. Global Banking clients include commercial customers, generally defined as companies with annual sales up to $2 billion, which include middle-market companies, commercial real estate firms, federal and state governments and municipalities, and large corporations, generally defined as companies with annual sales greater than $2 billion.

Global Markets
Global Markets offers sales and trading services, including research, to institutional clients across fixed-income, credit, currency, commodity and equity businesses. Global Markets product coverage includes securities and derivative products in both the primary and secondary markets. Global Markets provides market-making, financing, securities clearing, settlement and custody services globally to institutional investor clients in support of their investing and trading activities. Global Markets also works with commercial and corporate clients to provide risk management products using interest rate, equity, credit, currency and commodity derivatives, foreign exchange, fixed-income and mortgage-related products. As a result of market-making activities in these products, Global Markets may be required to manage risk in government securities, equity and equity-linked securities, high-grade and high-yield corporate debt securities, commercial paper, MBS, commodities and ABS. The economics of certain investment banking and underwriting activities are shared primarily between Global Markets and Global Banking based on the activities performed by each segment.
Global Wealth & Investment Management
GWIM provides comprehensive wealth management solutions to a broad base of clients from emerging affluent to the ultra-high-net-worth. These services include investment and brokerage services, estate and financial planning, fiduciary portfolio management, cash and liability management and specialty asset management. GWIM also provides retirement and benefit plan services, philanthropic management and asset management to individual and institutional clients. GWIM results are impacted by the migration of clients and their related deposit and loan balances to or from CBB, CRES and the ALM portfolio. Migration in the current year includes the additional movement of balances to Merrill Edge, which is in CBB. Subsequent to the date of migration, the associated net interest income, noninterest income and noninterest expense are recorded in the business to which the clients migrated.

All Other
All Other consists of equity investment activities and also includes liquidating businesses, merger and restructuring charges, ALM activities such as the residential mortgage portfolio and investment securities, and activities including economic hedges, gains/losses on structured liabilities, the impact of certain allocation methodologies and accounting hedge ineffectiveness. Additionally, All Other includes certain residential mortgage and discontinued real estate loans that are managed by CRES. During 2011, the Corporation sold its Canadian consumer card business and is evaluating its remaining international consumer card operations. As a result of these actions, the international consumer card business results were moved to All Other from CBB and prior periods have been reclassified.
Basis of Presentation
The management accounting and reporting process derives segment and business results by utilizing allocation methodologies for revenue and expense. The net income derived for the businesses is dependent upon revenue and cost allocations using an activity-based costing model, funds transfer pricing, and other methodologies and assumptions management believes are appropriate to reflect the results of the business.
Total revenue, net of interest expense, includes net interest income on a fully taxable-equivalent (FTE) basis and noninterest income. The adjustment of net interest income to a FTE basis results in a corresponding increase in income tax expense. The segment results also reflect certain revenue and expense methodologies that are utilized to determine net income. The net interest income of the businesses includes the results of a funds transfer pricing process that matches assets and liabilities with similar interest rate sensitivity and maturity characteristics. For presentation purposes, in segments where the total of liabilities and equity exceeds assets, which are generally deposit-taking segments, the Corporation allocates assets to match liabilities. Net interest income of the business segments also includes an allocation of net interest income generated by the Corporation’s ALM activities.
The Corporation’s ALM activities include an overall interest rate risk management strategy that incorporates the use of interest rate contracts to manage fluctuations in earnings that are caused by interest rate volatility. The Corporation’s goal is to manage interest rate sensitivity so that movements in interest rates do not significantly adversely affect earnings and capital. The majority of the Corporation’s ALM activities are allocated to the business segments and fluctuate based on performance. ALM activities include external product pricing decisions including deposit pricing strategies, the effects of the Corporation’s internal funds transfer pricing process and the net effects of other ALM activities.
Certain expenses not directly attributable to a specific business segment are allocated to the segments. The most significant of these expenses include data and item processing costs and certain centralized or shared functions. Data processing costs are allocated to the segments based on equipment usage. Item processing costs are allocated to the segments based on the volume of items processed for each segment. The costs of certain centralized or shared functions are allocated based on methodologies that reflect utilization.

The following tables present total revenue, net of interest expense, on a FTE basis and net income (loss) for 2011, 2010 and 2009, and total assets at December 31, 2011 and 2010 for each business segment, as well as All Other.
 
 
 
 
 
 
 
 
 
 
 
 
Business Segments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At and for the Year Ended December 31
Total Corporation (1)
 
Consumer & Business Banking (2)
 
Consumer Real Estate Services
(Dollars in millions)
2011
2010
2009
 
2011
2010
2009
 
2011
2010
2009
Net interest income (FTE basis)
$
45,588

$
52,693

$
48,410

 
$
21,377

$
24,298

$
25,427

 
$
3,207

$
4,662

$
4,961

Noninterest income (loss)
48,838

58,697

72,534

 
11,496

13,883

19,966

 
(6,361
)
5,667

11,677

Total revenue, net of interest expense (FTE basis)
94,426

111,390

120,944

 
32,873

38,181

45,393

 
(3,154
)
10,329

16,638

Provision for credit losses
13,410

28,435

48,570

 
3,490

11,647

27,688

 
4,524

8,490

11,244

Amortization of intangibles
1,509

1,731

1,978

 
759

870

1,006

 
11

38

63

Goodwill impairment
3,184

12,400

—

 
—

10,400

—

 
2,603

2,000

—

Other noninterest expense
75,581

68,977

64,735

 
16,945

17,309

16,278

 
19,190

12,768

11,350

Income (loss) before income taxes
742

(153
)
5,661

 
11,679

(2,045
)
421

 
(29,482
)
(12,967
)
(6,019
)
Income tax expense (benefit) (FTE basis)
(704
)
2,085

(615
)
 
4,227

3,089

189

 
(10,009
)
(4,070
)
(2,185
)
Net income (loss)
$
1,446

$
(2,238
)
$
6,276

 
$
7,452

$
(5,134
)
$
232

 
$
(19,473
)
$
(8,897
)
$
(3,834
)
Year-end total assets
$
2,129,046

$
2,264,909

 

 
$
520,503

$
510,986

 

 
$
163,712

$
212,412

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Global Banking
 
Global Markets
 
 
 
 
 
2011
2010
2009
 
2011
2010
2009
Net interest income (FTE basis)
 
 
 
 
$
9,490

$
10,064

$
10,274

 
$
3,682

$
4,332

$
5,584

Noninterest income
 
 
 
 
7,828

7,684

6,380

 
11,103

14,786

14,966

Total revenue, net of interest expense (FTE basis)
 
 
 
 
17,318

17,748

16,654

 
14,785

19,118

20,550

Provision for credit losses
 
 
 
 
(1,118
)
1,298

8,418

 
(56
)
30

366

Amortization of intangibles
 
 
 
 
102

121

141

 
66

66

65

Other noninterest expense
 
 
 
 
8,786

8,551

7,933

 
12,170

11,703

10,040

Income before income taxes
 
 
 
 
9,548

7,778

162

 
2,605

7,319

10,079

Income tax expense (FTE basis)
 
 
 
 
3,501

2,887

27

 
1,620

3,073

2,968

Net income
 
 
 
 
$
6,047

$
4,891

$
135

 
$
985

$
4,246

$
7,111

Year-end total assets
 
 
 
 
$
349,473

$
311,113

 

 
$
501,825

$
537,945

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Global Wealth &
Investment Management
 
All Other (2)
 
 
 
 
 
2011
2010
2009
 
2011
2010
2009
Net interest income (FTE basis)
 
 
 
 
$
6,052

$
5,682

$
5,885

 
$
1,780

$
3,655

$
(3,721
)
Noninterest income
 
 
 
 
11,344

10,609

9,924

 
13,428

6,068

9,621

Total revenue, net of interest expense (FTE basis)
 
 
 
 
17,396

16,291

15,809

 
15,208

9,723

5,900

Provision for credit losses
 
 
 
 
398

646

1,060

 
6,172

6,324

(206
)
Amortization of intangibles
 
 
 
 
438

458

480

 
133

178

223

Goodwill impairment
 
 
 
 
—

—

—

 
581

—

—

Other noninterest expense
 
 
 
 
13,919

12,751

11,617

 
4,571

5,895

7,517

Income (loss) before income taxes
 
 
 
 
2,641

2,436

2,652

 
3,751

(2,674
)
(1,634
)
Income tax expense (benefit) (FTE basis)
 
 
 
 
969

1,083

953

 
(1,012
)
(3,977
)
(2,567
)
Net income
 
 
 
 
$
1,672

$
1,353

$
1,699

 
$
4,763

$
1,303

$
933

Year-end total assets
 
 
 
 
$
284,062

$
296,478

 

 
$
309,471

$
395,975

 

(1) 
There were no material intersegment revenues.
(2) 
2011 and 2010 are presented in accordance with new consolidation guidance. 2009 CBB results are presented on a managed basis with a corresponding offset recorded in All Other.


The following tables present a reconciliation of the five business segments’ total revenue, net of interest expense, on a FTE basis, and net income (loss) to the Consolidated Statement of Income, and total assets to the Consolidated Balance Sheet. The adjustments presented in the following tables include consolidated income, expense and asset amounts not specifically allocated to individual business segments.
 
 
 
 
 
 
Business Segment Reconciliations
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
2011
 
2010
 
2009
Segments’ total revenue, net of interest expense (FTE basis)
$
79,218

 
$
101,667

 
$
115,044

Adjustments:
 

 
 

 
 

ALM activities
7,576

 
1,899

 
536

Equity investment income
7,044

 
4,574

 
10,586

Liquidating businesses
2,708

 
5,157

 
6,972

FTE basis adjustment
(972
)
 
(1,170
)
 
(1,301
)
Managed securitization impact to total revenue, net of interest expense
n/a

 
n/a

 
(11,399
)
Other
(2,120
)
 
(1,907
)
 
(795
)
Consolidated revenue, net of interest expense
$
93,454

 
$
110,220

 
$
119,643

Segments’ net income (loss)
$
(3,317
)
 
$
(3,541
)
 
$
5,343

Adjustments, net of taxes:
 

 
 

 
 

ALM activities
498

 
(2,476
)
 
(5,828
)
Equity investment income
4,438

 
2,882

 
6,669

Liquidating businesses
(94
)
 
727

 
462

Merger and restructuring charges
(402
)
 
(1,146
)
 
(1,714
)
Other
323

 
1,316

 
1,344

Consolidated net income (loss)
$
1,446

 
$
(2,238
)
 
$
6,276

 
 
 
 
 
 
 
 
 
December 31
 
 
 
2011
 
2010
Segments’ total assets
 
 
$
1,819,575

 
$
1,868,934

Adjustments:
 
 
 

 
 

ALM activities, including securities portfolio
 
 
611,793

 
641,494

Equity investments
 
 
7,002

 
34,272

Liquidating businesses
 
 
29,741

 
43,291

Elimination of segment excess asset allocations to match liabilities
 
 
(495,439
)
 
(460,107
)
Other
 
 
156,374

 
137,025

Consolidated total assets
 
 
$
2,129,046

 
$
2,264,909

n/a = not applicable