Annual report pursuant to Section 13 and 15(d)

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 six business segments: Deposits, Card Services, Consumer Real Estate Services (CRES), formerly Home Loans & Insurance, Global Commercial Banking, Global Banking & Markets (GBAM) and Global Wealth & Investment Management (GWIM), with the remaining operations recorded in All Other. The Corporation may periodically reclassify business segment results based on modifications to its management reporting methodologies and changes in organizational alignment. Prior period amounts have been reclassified to conform to current period presentation.
Deposits
Deposits includes the results of consumer deposits activities which consist of a comprehensive range of products provided to consumers and small businesses. Deposit products include traditional savings accounts, money market savings accounts, CDs and IRAs, noninterest- and interest-bearing checking accounts, as well as investment accounts and products. These products provide a relatively stable source of funding and liquidity. The Corporation earns net interest spread revenue from investing this liquidity in earning assets through client-facing lending and ALM activities. The revenue is allocated to the deposit products using a funds transfer pricing process which takes into account the interest rates and implied maturity of the deposits. Deposits also generates fees such as account service fees, non-sufficient funds fees, overdraft charges and ATM fees, as well as investment and brokerage fees from Merrill Edge accounts. In addition, Deposits includes the net impact of migrating customers and their related deposit balances between Deposits and other client-managed businesses. Subsequent to the date of migration, the associated net interest income, service charges and noninterest expense are recorded in the business to which deposits were transferred.
Card Services
Card Services is one of the leading issuers of credit and debit cards in the U.S. to consumers and small businesses providing a broad offering of lending products including co-branded and affinity products. During 2011, the Corporation sold its Canadian consumer card business and is evaluating its remaining international consumer card operations. In light of these actions, the international consumer card business results were moved to All Other effective July 1, 2011, prior periods have been reclassified and the Global Card Services business segment was renamed Card Services.
The Corporation reports its Card Services 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 Commercial Banking
Global Commercial 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. Clients include business banking and middle-market companies, commercial real estate firms and governments, and are generally defined as companies with sales up to $2 billion. Lending products and services include commercial loans and commitment facilities, real estate lending, asset-based lending and indirect consumer loans. Capital management and treasury solutions include treasury management, foreign exchange and short-term investing options. In 2011, management responsibility for the merchant services joint venture was moved from GBAM to Global Commercial Banking. Prior periods have been reclassified to reflect the change.
Global Banking & Markets
GBAM provides advisory services, financing, securities clearing, settlement and custody services globally to institutional investor clients in support of their investing and trading activities. GBAM also works with commercial and corporate clients to provide debt and equity underwriting and distribution capabilities, merger-related and other advisory services, and risk management products using interest rate, equity, credit, currency and commodity derivatives, foreign exchange, fixed-income and mortgage-related products. As a result of the Corporation’s market-making activities in these products, it may be required to manage positions in government securities, equity and equity-linked securities, high-grade and high-yield corporate debt securities, commercial paper, MBS and ABS. Corporate banking services provide 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. Corporate clients are generally defined as companies with annual sales greater than $2 billion.
Global Wealth & Investment Management
GWIM provides comprehensive wealth management capabilities 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 Deposits, CRES and the ALM portfolio. Migration in the current year includes the additional movement of balances to Merrill Edge, which is in Deposits. 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 including Global Principal Investments, Strategic and other investments, and Corporate Investments. All Other also includes liquidating businesses, merger and restructuring charges, ALM functions such as residential mortgage portfolio and investment securities and related activities, including economic hedges and 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 Card Services 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)
 
Deposits
 
Card Services (2)
(Dollars in millions)
2011
2010
2009
 
2011
2010
2009
 
2011
2010
2009
Net interest income (FTE basis)
$
45,588

$
52,693

$
48,410

 
$
8,471

$
8,278

$
7,195

 
$
11,507

$
14,413

$
16,502

Noninterest income
48,838

58,697

72,534

 
4,218

5,284

7,041

 
6,636

7,927

8,275

Total revenue, net of interest expense
94,426

111,390

120,944

 
12,689

13,562

14,236

 
18,143

22,340

24,777

Provision for credit losses
13,410

28,435

48,570

 
173

201

341

 
3,072

10,962

26,351

Amortization of intangibles
1,509

1,731

1,978

 
154

194

237

 
599

668

746

Goodwill impairment
3,184

12,400

—

 
—

—

—

 
—

10,400

—

Other noninterest expense
75,581

68,977

64,735

 
10,479

11,002

9,451

 
5,425

5,289

5,857

Income (loss) before income taxes
742

(153
)
5,661

 
1,883

2,165

4,207

 
9,047

(4,979
)
(8,177
)
Income tax expense (benefit) (FTE basis)
(704
)
2,085

(615
)
 
691

803

1,530

 
3,259

2,001

(2,965
)
Net income (loss)
$
1,446

$
(2,238
)
$
6,276

 
$
1,192

$
1,362

$
2,677

 
$
5,788

$
(6,980
)
$
(5,212
)
Year-end total assets
$
2,129,046

$
2,264,909

 

 
$
445,680

$
440,954

 

 
$
127,636

$
138,491

 

 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer Real Estate Services
 
Global Commercial Banking
 
Global Banking & Markets
 
2011
2010
2009
 
2011
2010
2009
 
2011
2010
2009
Net interest income (FTE basis)
$
3,207

$
4,662

$
4,961

 
$
7,176

$
8,007

$
8,022

 
$
7,401

$
8,000

$
9,557

Noninterest income
(6,361
)
5,667

11,677

 
3,377

3,219

7,438

 
16,217

19,949

18,624

Total revenue, net of interest expense
(3,154
)
10,329

16,638

 
10,553

11,226

15,460

 
23,618

27,949

28,181

Provision for credit losses
4,524

8,490

11,244

 
(634
)
1,979

7,782

 
(296
)
(166
)
1,998

Amortization of intangibles
11

38

63

 
57

72

100

 
116

123

129

Goodwill impairment
2,603

2,000

—

 
—

—

—

 
—

—

—

Other noninterest expense
19,279

12,848

11,437

 
4,177

4,058

4,120

 
18,063

17,412

15,135

Income (loss) before income taxes
(29,571
)
(13,047
)
(6,106
)
 
6,953

5,117

3,458

 
5,735

10,580

10,919

Income tax expense (benefit) (FTE basis)
(10,042
)
(4,100
)
(2,217
)
 
2,551

1,899

1,279

 
2,768

4,283

3,246

Net income (loss)
$
(19,529
)
$
(8,947
)
$
(3,889
)
 
$
4,402

$
3,218

$
2,179

 
$
2,967

$
6,297

$
7,673

Year-end total assets
$
163,712

$
212,412

 

 
$
289,985

$
312,807

 

 
$
637,754

$
653,737

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Global Wealth &
Investment Management
 
All Other (2)
 
 
 
 
 
2011
2010
2009
 
2011
2010
2009
Net interest income (FTE basis)
 
 
 
 
$
6,046

$
5,677

$
5,882

 
$
1,780

$
3,656

$
(3,709
)
Noninterest income
 
 
 
 
11,330

10,612

9,904

 
13,421

6,039

9,575

Total revenue, net of interest expense
 
 
 
 
17,376

16,289

15,786

 
15,201

9,695

5,866

Provision for credit losses
 
 
 
 
398

646

1,060

 
6,173

6,323

(206
)
Amortization of intangibles
 
 
 
 
438

458

480

 
134

178

223

Goodwill impairment
 
 
 
 
—

—

—

 
581

—

—

Other noninterest expense
 
 
 
 
13,957

12,769

11,641

 
4,201

5,599

7,094

Income (loss) before income taxes
 
 
 
 
2,583

2,416

2,605

 
4,112

(2,405
)
(1,245
)
Income tax expense (benefit) (FTE basis)
 
 
 
 
948

1,076

936

 
(879
)
(3,877
)
(2,424
)
Net income
 
 
 
 
$
1,635

$
1,340

$
1,669

 
$
4,991

$
1,472

$
1,179

Year-end total assets
 
 
 
 
$
283,844

$
296,251

 

 
$
180,435

$
210,257

 

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


The following tables present a reconciliation of the six 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)
$
79,225

 
$
101,695

 
$
115,078

Adjustments:
 

 
 

 
 

ALM activities
7,576

 
1,899

 
(766
)
Equity investment income
7,037

 
4,549

 
10,589

Liquidating businesses
2,708

 
5,155

 
6,932

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
)
 
(1,908
)
 
510

Consolidated revenue, net of interest expense
$
93,454

 
$
110,220

 
$
119,643

Segments’ net income (loss)
$
(3,545
)
 
$
(3,710
)
 
$
5,097

Adjustments, net of taxes:
 

 
 

 
 

ALM activities
515

 
(2,462
)
 
(6,597
)
Equity investment income
4,433

 
2,866

 
6,671

Liquidating businesses
(103
)
 
718

 
412

Merger and restructuring charges
(402
)
 
(1,146
)
 
(1,714
)
Other
548

 
1,496

 
2,407

Consolidated net income (loss)
$
1,446

 
$
(2,238
)
 
$
6,276

 
 
 
 
 
 
 
 
 
December 31
 
 
 
2011
 
2010
Segments’ total assets
 
 
$
1,948,611

 
$
2,054,652

Adjustments:
 
 
 

 
 

ALM activities, including securities portfolio
 
 
647,569

 
601,307

Equity investments
 
 
6,923

 
34,185

Liquidating businesses
 
 
29,746

 
43,288

Elimination of segment excess asset allocations to match liabilities
 
 
(531,702
)
 
(476,471
)
Other
 
 
27,899

 
7,948

Consolidated total assets
 
 
$
2,129,046

 
$
2,264,909

n/a = not applicable