Exhibit 99.2
Supplemental Information
Fourth Quarter 2005
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
Consolidated Financial Highlights
(Dollars in millions, except per share information; shares in thousands)
Year Ended December 31 | Fourth 2005 | Third 2005 | Second 2005 | First 2005 | Fourth 2004 | |||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||||||
Income statement | ||||||||||||||||||||||||||||
Total revenue | $ | 56,766 | $ | 48,879 | $ | 14,122 | $ | 14,607 | $ | 14,015 | $ | 14,022 | $ | 13,713 | ||||||||||||||
Provision for credit losses | 4,014 | 2,769 | 1,400 | 1,159 | 875 | 580 | 706 | |||||||||||||||||||||
Gains on sales of debt securities | 1,084 | 2,123 | 71 | 29 | 325 | 659 | 101 | |||||||||||||||||||||
Noninterest expense | 28,681 | 27,012 | 7,320 | 7,285 | 7,019 | 7,057 | 7,333 | |||||||||||||||||||||
Income tax expense | 8,269 | 7,078 | 1,705 | 2,065 | 2,150 | 2,349 | 1,926 | |||||||||||||||||||||
Net income | 16,886 | 14,143 | 3,768 | 4,127 | 4,296 | 4,695 | 3,849 | |||||||||||||||||||||
Diluted earnings per common share | 4.15 | 3.69 | 0.93 | 1.02 | 1.06 | 1.14 | 0.94 | |||||||||||||||||||||
Average diluted common shares issued and outstanding | 4,068,140 | 3,823,943 | 4,053,859 | 4,054,659 | 4,065,355 | 4,099,062 | 4,106,040 | |||||||||||||||||||||
Dividends paid per common share | $ | 1.90 | $ | 1.70 | $ | 0.50 | $ | 0.50 | $ | 0.45 | $ | 0.45 | $ | 0.45 | ||||||||||||||
Performance ratios | ||||||||||||||||||||||||||||
Return on average assets | 1.33 | % | 1.35 | % | 1.15 | % | 1.26 | % | 1.35 | % | 1.59 | % | 1.33 | % | ||||||||||||||
Return on average common shareholders’ equity | 17.03 | 16.83 | 15.05 | 16.33 | 17.54 | 19.30 | 15.63 | |||||||||||||||||||||
At period end | ||||||||||||||||||||||||||||
Book value per share of common stock | $ | 25.24 | $ | 24.56 | $ | 25.24 | $ | 25.16 | $ | 24.96 | $ | 24.35 | $ | 24.56 | ||||||||||||||
Market price per share of common stock: | ||||||||||||||||||||||||||||
Closing price | $ | 46.15 | $ | 46.99 | $ | 46.15 | $ | 42.10 | $ | 45.61 | $ | 44.10 | $ | 46.99 | ||||||||||||||
High closing price for the period | 47.08 | 47.44 | 46.99 | 45.98 | 47.08 | 47.08 | 47.44 | |||||||||||||||||||||
Low closing price for the period | 41.57 | 38.96 | 41.57 | 41.60 | 44.01 | 43.66 | 43.62 | |||||||||||||||||||||
Market capitalization | 184,586 | 190,147 | 184,586 | 168,950 | 183,202 | 177,958 | 190,147 | |||||||||||||||||||||
Number of banking centers - domestic | 5,873 | 5,885 | 5,873 | 5,844 | 5,880 | 5,889 | 5,885 | |||||||||||||||||||||
Number of ATMs - domestic | 16,785 | 16,771 | 16,785 | 16,714 | 16,687 | 16,798 | 16,771 | |||||||||||||||||||||
Full-time equivalent employees | 176,638 | 178,053 | 176,638 | 177,236 | 177,795 | 176,675 | 178,053 |
Certain prior period amounts have been reclassified to conform to current period presentation.
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
1
Bank of America Corporation
Supplemental Financial Data
(Dollars in millions)
Fully taxable-equivalent basis data
Year Ended December 31 | Fourth 2005 | Third 2005 | Second 2005 | First 2005 | Fourth 2004 | |||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||||||
Net interest income | $ | 31,989 | $ | 29,511 | $ | 8,103 | $ | 7,973 | $ | 7,841 | $ | 8,072 | $ | 7,954 | ||||||||||||||
Total revenue | 57,599 | 49,596 | 14,365 | 14,807 | 14,206 | 14,221 | 13,920 | |||||||||||||||||||||
Net interest yield | 2.88 | % | 3.26 | % | 2.82 | % | 2.80 | % | 2.81 | % | 3.11 | % | 3.18 | % | ||||||||||||||
Efficiency ratio | 49.79 | 54.46 | 50.95 | 49.20 | 49.42 | 49.62 | 52.69 |
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.
Shareholder value added (SVA) is a key measure of performance not defined by GAAP that is used in managing our growth strategy orientation and strengthening our focus on generating long-term growth and shareholder value. SVA is used to evaluate the Corporation’s use of equity (i.e. capital) at the individual unit level and is an integral component in the analytics for resource allocation. Using SVA as a performance measure places specific focus on whether incremental investments generate returns in excess of the costs of capital associated with those investments. Each business segment has a goal for growth in SVA reflecting the individual segment’s business and customer strategy.
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 quarters ended December 31, 2005, September 30, 2005, June 30, 2005, March 31, 2005 and December 31, 2004, and the year ended December 31, 2005 and 2004.
Reconciliation of net income to operating earnings
Year Ended December 31 | Fourth 2005 | Third 2005 | Second 2005 | First 2005 | Fourth 2004 | |||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||||||
Net income | $ | 16,886 | $ | 14,143 | $ | 3,768 | $ | 4,127 | $ | 4,296 | $ | 4,695 | $ | 3,849 | ||||||||||||||
Merger and restructuring charges | 412 | 618 | 59 | 120 | 121 | 112 | 272 | |||||||||||||||||||||
Related income tax benefit | (137 | ) | (207 | ) | (19 | ) | (40 | ) | (41 | ) | (37 | ) | (91 | ) | ||||||||||||||
Operating earnings | $ | 17,161 | $ | 14,554 | $ | 3,808 | $ | 4,207 | $ | 4,376 | $ | 4,770 | $ | 4,030 | ||||||||||||||
Reconciliation of average common shareholders’ equity to average tangible common shareholders’ equity | ||||||||||||||||||||||||||||
Average common shareholders’ equity | $ | 99,025 | $ | 83,953 | $ | 99,209 | $ | 100,183 | $ | 98,145 | $ | 98,542 | $ | 97,828 | ||||||||||||||
Average goodwill and other intangibles | (48,880 | ) | (39,796 | ) | (48,644 | ) | (48,766 | ) | (48,968 | ) | (49,148 | ) | (49,413 | ) | ||||||||||||||
Average tangible common shareholders’ equity | $ | 50,145 | $ | 44,157 | $ | 50,565 | $ | 51,417 | $ | 49,177 | $ | 49,394 | $ | 48,415 | ||||||||||||||
Operating basis | ||||||||||||||||||||||||||||
Diluted earnings per common share | $ | 4.21 | $ | 3.80 | $ | 0.94 | $ | 1.04 | $ | 1.08 | $ | 1.16 | $ | 0.98 | ||||||||||||||
Return on average assets | 1.35 | % | 1.39 | % | 1.16 | % | 1.29 | % | 1.37 | % | 1.61 | % | 1.39 | % | ||||||||||||||
Return on average common shareholders’ equity | 17.31 | 17.32 | 15.21 | 16.64 | 17.87 | 19.61 | 16.37 | |||||||||||||||||||||
Return on average tangible common shareholders’ equity | 34.19 | 32.93 | 29.84 | 32.43 | 35.66 | 39.12 | 33.08 | |||||||||||||||||||||
Efficiency ratio | 49.08 | 53.22 | 50.54 | 48.39 | 48.56 | 48.83 | 50.73 | |||||||||||||||||||||
Reconciliation of net income to shareholder value added | ||||||||||||||||||||||||||||
Net income | $ | 16,886 | $ | 14,143 | $ | 3,768 | $ | 4,127 | $ | 4,296 | $ | 4,695 | $ | 3,849 | ||||||||||||||
Amortization of intangibles | 809 | 664 | 196 | 201 | 204 | 208 | 209 | |||||||||||||||||||||
Merger and restructuring charges, net of tax benefit | 275 | 411 | 40 | 80 | 80 | 75 | 181 | |||||||||||||||||||||
Capital charge | (10,893 | ) | (9,235 | ) | (2,751 | ) | (2,778 | ) | (2,691 | ) | (2,673 | ) | (2,705 | ) | ||||||||||||||
Shareholder value added | $ | 7,077 | $ | 5,983 | $ | 1,253 | $ | 1,630 | $ | 1,889 | $ | 2,305 | $ | 1,534 | ||||||||||||||
Certain prior period amounts have been reclassified to conform to current period presentation.
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
2
Bank of America Corporation
Consolidated Statement of Income
(Dollars in millions, except per share information; shares in thousands)
Year Ended December 31 | Fourth 2005 | Third 2005 | Second 2005 | First 2005 | Fourth 2004 | ||||||||||||||||
2005 | 2004 | ||||||||||||||||||||
Interest income | |||||||||||||||||||||
Interest and fees on loans and leases | $ | 34,934 | $ | 28,213 | $ | 9,559 | $ | 8,956 | $ | 8,312 | $ | 8,107 | $ | 7,919 | |||||||
Interest and dividends on securities | 10,949 | 7,262 | 2,819 | 2,797 | 2,799 | 2,534 | 2,065 | ||||||||||||||
Federal funds sold and securities purchased under agreements to resell | 4,979 | 2,043 | 1,462 | 1,372 | 1,252 | 893 | 712 | ||||||||||||||
Trading account assets | 5,743 | 4,016 | 1,585 | 1,550 | 1,426 | 1,182 | 1,035 | ||||||||||||||
Other interest income | 2,091 | 1,690 | 605 | 547 | 502 | 437 | 464 | ||||||||||||||
Total interest income | 58,696 | 43,224 | 16,030 | 15,222 | 14,291 | 13,153 | 12,195 | ||||||||||||||
Interest expense | |||||||||||||||||||||
Deposits | 9,295 | 6,275 | 2,434 | 2,439 | 2,379 | 2,043 | 1,829 | ||||||||||||||
Short-term borrowings | 11,798 | 4,434 | 3,902 | 3,250 | 2,677 | 1,969 | 1,543 | ||||||||||||||
Trading account liabilities | 2,364 | 1,317 | 619 | 707 | 611 | 427 | 352 | ||||||||||||||
Long-term debt | 4,083 | 2,404 | 1,215 | 1,053 | 974 | 841 | 724 | ||||||||||||||
Total interest expense | 27,540 | 14,430 | 8,170 | 7,449 | 6,641 | 5,280 | 4,448 | ||||||||||||||
Net interest income | 31,156 | 28,794 | 7,860 | 7,773 | 7,650 | 7,873 | 7,747 | ||||||||||||||
Noninterest income | |||||||||||||||||||||
Service charges | 7,704 | 6,989 | 1,927 | 2,080 | 1,920 | 1,777 | 1,891 | ||||||||||||||
Investment and brokerage services | 4,184 | 3,614 | 1,062 | 1,060 | 1,049 | 1,013 | 1,008 | ||||||||||||||
Mortgage banking income | 805 | 414 | 215 | 180 | 189 | 221 | 156 | ||||||||||||||
Investment banking income | 1,856 | 1,886 | 537 | 522 | 431 | 366 | 497 | ||||||||||||||
Equity investment gains | 2,040 | 863 | 481 | 668 | 492 | 399 | 426 | ||||||||||||||
Card income | 5,753 | 4,592 | 1,507 | 1,520 | 1,437 | 1,289 | 1,380 | ||||||||||||||
Trading account profits | 1,812 | 869 | 253 | 514 | 285 | 760 | 269 | ||||||||||||||
Other income | 1,456 | 858 | 280 | 290 | 562 | 324 | 339 | ||||||||||||||
Total noninterest income | 25,610 | 20,085 | 6,262 | 6,834 | 6,365 | 6,149 | 5,966 | ||||||||||||||
Total revenue | 56,766 | 48,879 | 14,122 | 14,607 | 14,015 | 14,022 | 13,713 | ||||||||||||||
Provision for credit losses | 4,014 | 2,769 | 1,400 | 1,159 | 875 | 580 | 706 | ||||||||||||||
Gains on sales of debt securities | 1,084 | 2,123 | 71 | 29 | 325 | 659 | 101 | ||||||||||||||
Noninterest expense | |||||||||||||||||||||
Personnel | 15,054 | 13,435 | 3,845 | 3,837 | 3,671 | 3,701 | 3,520 | ||||||||||||||
Occupancy | 2,588 | 2,379 | 699 | 638 | 615 | 636 | 648 | ||||||||||||||
Equipment | 1,199 | 1,214 | 305 | 300 | 297 | 297 | 326 | ||||||||||||||
Marketing | 1,255 | 1,349 | 265 | 307 | 346 | 337 | 337 | ||||||||||||||
Professional fees | 930 | 836 | 283 | 254 | 216 | 177 | 275 | ||||||||||||||
Amortization of intangibles | 809 | 664 | 196 | 201 | 204 | 208 | 209 | ||||||||||||||
Data processing | 1,487 | 1,330 | 394 | 361 | 368 | 364 | 371 | ||||||||||||||
Telecommunications | 827 | 730 | 219 | 206 | 196 | 206 | 216 | ||||||||||||||
Other general operating | 4,120 | 4,457 | 1,055 | 1,061 | 985 | 1,019 | 1,159 | ||||||||||||||
Merger and restructuring charges | 412 | 618 | 59 | 120 | 121 | 112 | 272 | ||||||||||||||
Total noninterest expense | 28,681 | 27,012 | 7,320 | 7,285 | 7,019 | 7,057 | 7,333 | ||||||||||||||
Income before income taxes | 25,155 | 21,221 | 5,473 | 6,192 | 6,446 | 7,044 | 5,775 | ||||||||||||||
Income tax expense | 8,269 | 7,078 | 1,705 | 2,065 | 2,150 | 2,349 | 1,926 | ||||||||||||||
Net income | $ | 16,886 | $ | 14,143 | $ | 3,768 | $ | 4,127 | $ | 4,296 | $ | 4,695 | $ | 3,849 | |||||||
Net income available to common shareholders | $ | 16,868 | $ | 14,127 | $ | 3,764 | $ | 4,122 | $ | 4,292 | $ | 4,690 | $ | 3,844 | |||||||
Per common share information | |||||||||||||||||||||
Earnings | $ | 4.21 | $ | 3.76 | $ | 0.94 | $ | 1.03 | $ | 1.07 | $ | 1.16 | $ | 0.95 | |||||||
Diluted earnings | $ | 4.15 | $ | 3.69 | $ | 0.93 | $ | 1.02 | $ | 1.06 | $ | 1.14 | $ | 0.94 | |||||||
Dividends paid | $ | 1.90 | $ | 1.70 | $ | 0.50 | $ | 0.50 | $ | 0.45 | $ | 0.45 | $ | 0.45 | |||||||
Average common shares issued and outstanding | 4,008,688 | 3,758,507 | 3,996,024 | 4,000,573 | 4,005,356 | 4,032,550 | 4,032,979 | ||||||||||||||
Average diluted common shares issued and outstanding | 4,068,140 | 3,823,943 | 4,053,859 | 4,054,659 | 4,065,355 | 4,099,062 | 4,106,040 | ||||||||||||||
Certain prior period amounts have been reclassified to conform to current period presentation.
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
3
Bank of America Corporation
Consolidated Balance Sheet
(Dollars in millions) | December 31 2005 | September 30 2005 | December 31 2004 | |||||||||
Assets | ||||||||||||
Cash and cash equivalents | $ | 36,999 | $ | 32,771 | $ | 28,936 | ||||||
Time deposits placed and other short-term investments | 12,800 | 11,236 | 12,361 | |||||||||
Federal funds sold and securities purchased under agreements to resell | 149,785 | 135,409 | 91,360 | |||||||||
Trading account assets | 131,707 | 121,256 | 93,587 | |||||||||
Derivative assets | 23,712 | 26,005 | 30,235 | |||||||||
Securities: | ||||||||||||
Available-for-sale | 221,556 | 227,349 | 194,743 | |||||||||
Held-to-maturity, at cost | 47 | 136 | 330 | |||||||||
Total securities | 221,603 | 227,485 | 195,073 | |||||||||
Loans and leases | 573,782 | 554,603 | 521,837 | |||||||||
Allowance for loan and lease losses | (8,045 | ) | (8,326 | ) | (8,626 | ) | ||||||
Loans and leases, net of allowance | 565,737 | 546,277 | 513,211 | |||||||||
Premises and equipment, net | 7,786 | 7,659 | 7,517 | |||||||||
Mortgage servicing rights | 2,807 | 2,764 | 2,482 | |||||||||
Goodwill | 45,354 | 45,298 | 45,262 | |||||||||
Core deposit intangibles and other intangibles | 3,194 | 3,356 | 3,887 | |||||||||
Other assets | 90,311 | 92,743 | 86,546 | |||||||||
Total assets | $ | 1,291,795 | $ | 1,252,259 | $ | 1,110,457 | ||||||
Liabilities | ||||||||||||
Deposits in domestic offices: | ||||||||||||
Noninterest-bearing | $ | 179,571 | $ | 174,990 | $ | 163,833 | ||||||
Interest-bearing | 384,155 | 390,973 | 396,645 | |||||||||
Deposits in foreign offices: | ||||||||||||
Noninterest-bearing | 7,165 | 6,750 | 6,066 | |||||||||
Interest-bearing | 63,779 | 53,764 | 52,026 | |||||||||
Total deposits | 634,670 | 626,477 | 618,570 | |||||||||
Federal funds purchased and securities sold under agreements to repurchase | 240,655 | 217,053 | 119,741 | |||||||||
Trading account liabilities | 50,890 | 51,244 | 36,654 | |||||||||
Derivative liabilities | 15,000 | 15,711 | 17,928 | |||||||||
Commercial paper and other short-term borrowings | 116,269 | 107,655 | 78,598 | |||||||||
Accrued expenses and other liabilities (includes$395, $390 and $402 of reserve for unfunded lending commitments) | 31,749 | 32,976 | 41,243 | |||||||||
Long-term debt | 101,338 | 99,885 | 98,078 | |||||||||
Total liabilities | 1,190,571 | 1,151,001 | 1,010,812 | |||||||||
Shareholders’ equity | ||||||||||||
Preferred stock, $0.01 par value; authorized - 100,000,000 shares; issued and outstanding -1,090,189 shares | 271 | 271 | 271 | |||||||||
Common stock and additional paid-in capital, $0.01 par value; authorized -7,500,000,000shares; issued and outstanding - -3,999,688,491; 4,013,063,444 and 4,046,546,212 shares | 41,693 | 42,548 | 44,236 | |||||||||
Retained earnings | 67,205 | 65,439 | 58,006 | |||||||||
Accumulated other comprehensive income (loss) | (7,518 | ) | (6,509 | ) | (2,587 | ) | ||||||
Other | (427 | ) | (491 | ) | (281 | ) | ||||||
Total shareholders’ equity | 101,224 | 101,258 | 99,645 | |||||||||
Total liabilities and shareholders’ equity | $ | 1,291,795 | $ | 1,252,259 | $ | 1,110,457 | ||||||
Certain prior period amounts have been reclassified to conform to current period presentation.
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
4
Bank of America Corporation
Capital Management
(Dollars in millions)
Fourth Quarter 2005(1) | Third Quarter 2005 | Second Quarter 2005 | First Quarter 2005 | Fourth Quarter 2004 | ||||||||||||||||
Tier 1 capital | $ | 74,027 | $ | 73,030 | $ | 68,806 | $ | 67,127 | $ | 64,281 | ||||||||||
Total capital | 99,554 | 98,989 | 94,933 | 93,774 | 92,266 | |||||||||||||||
Risk-weighted assets | 901,693 | 889,979 | 853,669 | 818,179 | �� | 793,523 | ||||||||||||||
Tier 1 capital ratio | 8.21 | % | 8.21 | % | 8.06 | % | 8.20 | % | 8.10 | % | ||||||||||
Total capital ratio | 11.04 | 11.12 | 11.12 | 11.46 | 11.63 | |||||||||||||||
Tangible equity ratio(2) | 4.24 | 4.37 | 4.32 | 4.25 | 4.76 | |||||||||||||||
Leverage ratio | 5.89 | 5.85 | 5.59 | 5.82 | 5.82 |
(1) | Preliminary data on risk-based capital |
(2) | Tangible equity ratio equals shareholders’ equity less goodwill, core deposit intangibles and other intangibles divided by total assets less goodwill, core deposit intangibles and other intangibles. |
Share Repurchase Program
32.3 million common shares were repurchased in the fourth quarter of 2005 as a part of an ongoing share repurchase program.
154.2 million shares remain outstanding under the 2005 authorized program.
18.9 million shares were issued in the fourth quarter of 2005.
*Preliminary | data on risk-based capital |
5
Bank of America Corporation
Core Net Interest Income - Managed Basis
(Dollars in millions)
Year Ended December 31 | Fourth 2005 | Third 2005 | Second 2005 | First 2005 | Fourth 2004 | |||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||||||
Net Interest Income | ||||||||||||||||||||||||||||
As reported (fully taxable-equivalent basis) | $ | 31,989 | $ | 29,511 | $ | 8,103 | $ | 7,973 | $ | 7,841 | $ | 8,072 | $ | 7,954 | ||||||||||||||
Trading-related net interest income | (1,444 | ) | (2,039 | ) | (300 | ) | (316 | ) | (414 | ) | (414 | ) | (417 | ) | ||||||||||||||
Core net interest income | 30,545 | 27,472 | 7,803 | 7,657 | 7,427 | 7,658 | 7,537 | |||||||||||||||||||||
Impact of revolving securitizations | 709 | 881 | 104 | 158 | 209 | 238 | 244 | |||||||||||||||||||||
Core net interest income - managed basis | $ | 31,254 | $ | 28,353 | $ | 7,907 | $ | 7,815 | $ | 7,636 | $ | 7,896 | $ | 7,781 | ||||||||||||||
Average Earning Assets | ||||||||||||||||||||||||||||
As reported | $ | 1,111,997 | $ | 905,302 | $ | 1,145,541 | $ | 1,137,619 | $ | 1,118,527 | $ | 1,044,914 | $ | 998,004 | ||||||||||||||
Trading-related earning assets | (299,374 | ) | (227,230 | ) | (305,156 | ) | (312,441 | ) | (315,716 | ) | (263,583 | ) | (252,217 | ) | ||||||||||||||
Core average earning assets | 812,623 | 678,072 | 840,385 | 825,178 | 802,811 | 781,331 | 745,787 | |||||||||||||||||||||
Impact of revolving securitizations | 8,440 | 10,179 | 5,342 | 7,723 | 9,973 | 10,791 | 11,112 | |||||||||||||||||||||
Core average earning assets - managed basis | $ | 821,063 | $ | 688,251 | $ | 845,727 | $ | 832,901 | $ | 812,784 | $ | 792,122 | $ | 756,899 | ||||||||||||||
Net Interest Yield Contribution | ||||||||||||||||||||||||||||
As reported (fully taxable-equivalent basis) | 2.88 | % | 3.26 | % | 2.82 | % | 2.80 | % | 2.81 | % | 3.11 | % | 3.18 | % | ||||||||||||||
Impact of trading-related activities | 0.88 | 0.79 | 0.88 | 0.91 | 0.90 | 0.84 | 0.85 | |||||||||||||||||||||
Core net interest yield on earning assets | 3.76 | 4.05 | 3.70 | 3.71 | 3.71 | 3.95 | 4.03 | |||||||||||||||||||||
Impact of revolving securitizations | 0.04 | 0.06 | 0.02 | 0.04 | 0.05 | 0.06 | 0.06 | |||||||||||||||||||||
Core net interest yield on earning assets - managed basis | 3.80 | % | 4.11 | % | 3.72 | % | 3.75 | % | 3.76 | % | 4.01 | % | 4.09 | % | ||||||||||||||
Certain prior period amounts have been restated reflecting realignment of business segments.
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
6
Bank of America Corporation
Quarterly Average Balances and Interest Rates - Fully Taxable-equivalent Basis
(Dollars in millions)
Fourth Quarter 2005 | Third Quarter 2005 | Fourth Quarter 2004 | |||||||||||||||||||||||||
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 | $ | 14,619 | $ | 132 | 3.59 | % | $ | 14,498 | $ | 125 | 3.43 | % | $ | 15,620 | $ | 128 | 3.24 | % | |||||||||
Federal funds sold and securities purchased under agreements to resell | 165,908 | 1,462 | 3.51 | 176,650 | 1,372 | 3.09 | 149,226 | 712 | 1.90 | ||||||||||||||||||
Trading account assets | 139,441 | 1,648 | 4.72 | 142,287 | 1,578 | 4.42 | 110,585 | 1,067 | 3.85 | ||||||||||||||||||
Securities | 221,411 | 2,845 | 5.14 | 225,952 | 2,824 | 5.00 | 171,173 | 2,083 | 4.87 | ||||||||||||||||||
Loans and leases(1): | |||||||||||||||||||||||||||
Residential mortgage | 178,755 | 2,422 | 5.41 | 171,002 | 2,294 | 5.36 | 178,879 | 2,459 | 5.49 | ||||||||||||||||||
Credit card | 56,858 | 1,747 | 12.19 | 55,271 | 1,651 | 11.85 | 49,366 | 1,351 | 10.88 | ||||||||||||||||||
Home equity lines | 60,571 | 1,012 | 6.63 | 58,046 | 910 | 6.22 | 48,336 | 609 | 5.01 | ||||||||||||||||||
Direct/Indirect consumer | 47,181 | 703 | 5.91 | 47,900 | 702 | 5.81 | 39,526 | 551 | 5.55 | ||||||||||||||||||
Other consumer(2) | 6,653 | 184 | 11.01 | 6,715 | 170 | 10.05 | 7,557 | 153 | 8.07 | ||||||||||||||||||
Total consumer | 350,018 | 6,068 | 6.90 | 338,934 | 5,727 | 6.72 | 323,664 | 5,123 | 6.31 | ||||||||||||||||||
Commercial - domestic | 137,224 | 2,306 | 6.67 | 127,044 | 2,124 | 6.63 | 121,412 | 1,914 | 6.27 | ||||||||||||||||||
Commercial real estate | 36,017 | 597 | 6.58 | 34,663 | 542 | 6.20 | 31,355 | 392 | 4.98 | ||||||||||||||||||
Commercial lease financing | 20,178 | 241 | 4.79 | 20,402 | 239 | 4.69 | 20,204 | 254 | 5.01 | ||||||||||||||||||
Commercial - foreign | 20,143 | 378 | 7.45 | 18,444 | 349 | 7.50 | 18,828 | 272 | 5.76 | ||||||||||||||||||
Total commercial | 213,562 | 3,522 | 6.55 | 200,553 | 3,254 | 6.44 | 191,799 | 2,832 | 5.88 | ||||||||||||||||||
Total loans and leases | 563,580 | 9,590 | 6.76 | 539,487 | 8,981 | 6.62 | 515,463 | 7,955 | 6.15 | ||||||||||||||||||
Other earning assets | 40,582 | 596 | 5.83 | 38,745 | 542 | 5.57 | 35,937 | 457 | 5.08 | ||||||||||||||||||
Total earning assets(3) | 1,145,541 | 16,273 | 5.66 | 1,137,619 | 15,422 | 5.40 | 998,004 | 12,402 | 4.96 | ||||||||||||||||||
Cash and cash equivalents | 33,693 | 32,969 | 31,028 | ||||||||||||||||||||||||
Other assets, less allowance for loan and lease losses | 125,815 | 124,157 | 123,519 | ||||||||||||||||||||||||
Total assets | $ | 1,305,049 | $ | 1,294,745 | $ | 1,152,551 | |||||||||||||||||||||
Interest-bearing liabilities | |||||||||||||||||||||||||||
Domestic interest-bearing deposits: | |||||||||||||||||||||||||||
Savings | $ | 35,535 | $ | 68 | 0.76 | % | $ | 35,853 | $ | 56 | 0.62 | % | $ | 36,927 | $ | 36 | 0.39 | % | |||||||||
NOW and money market deposit accounts | 224,122 | 721 | 1.28 | 224,341 | 743 | 1.31 | 234,596 | 589 | 1.00 | ||||||||||||||||||
Consumer CDs and IRAs | 120,321 | 987 | 3.25 | 130,975 | 1,057 | 3.20 | 109,243 | 711 | 2.59 | ||||||||||||||||||
Negotiable CDs, public funds and other time deposits | 5,085 | 27 | 2.13 | 4,414 | 50 | 4.54 | 7,563 | 81 | 4.27 | ||||||||||||||||||
Total domestic interest-bearing deposits | 385,063 | 1,803 | 1.86 | 395,583 | 1,906 | 1.91 | 388,329 | 1,417 | 1.45 | ||||||||||||||||||
Foreign interest-bearing deposits(4): | |||||||||||||||||||||||||||
Banks located in foreign countries | 24,451 | 355 | 5.77 | 19,707 | 294 | 5.92 | 17,953 | 275 | 6.11 | ||||||||||||||||||
Governments and official institutions | 7,579 | 73 | 3.84 | 7,317 | 62 | 3.37 | 5,843 | 33 | 2.21 | ||||||||||||||||||
Time, savings and other | 32,624 | 203 | 2.46 | 32,024 | 177 | 2.19 | 30,459 | 104 | 1.36 | ||||||||||||||||||
Total foreign interest-bearing deposits | 64,654 | 631 | 3.87 | 59,048 | 533 | 3.58 | 54,255 | 412 | 3.02 | ||||||||||||||||||
Total interest-bearing deposits | 449,717 | 2,434 | 2.15 | 454,631 | 2,439 | 2.13 | 442,584 | 1,829 | 1.64 | ||||||||||||||||||
Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings | 364,140 | 3,902 | 4.25 | 339,980 | 3,250 | 3.79 | 252,413 | 1,543 | 2.43 | ||||||||||||||||||
Trading account liabilities | 56,880 | 619 | 4.32 | 68,132 | 707 | 4.12 | 37,387 | 352 | 3.74 | ||||||||||||||||||
Long-term debt | 100,334 | 1,215 | 4.84 | 99,576 | 1,053 | 4.23 | 99,559 | 724 | 2.91 | ||||||||||||||||||
Total interest-bearing liabilities(3) | 971,071 | 8,170 | 3.34 | 962,319 | 7,449 | 3.08 | 831,943 | 4,448 | 2.13 | ||||||||||||||||||
Noninterest-bearing sources: | |||||||||||||||||||||||||||
Noninterest-bearing deposits | 179,205 | 178,140 | 167,352 | ||||||||||||||||||||||||
Other liabilities | 55,293 | 53,832 | 55,156 | ||||||||||||||||||||||||
Shareholders’ equity | 99,480 | 100,454 | 98,100 | ||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,305,049 | $ | 1,294,745 | $ | 1,152,551 | |||||||||||||||||||||
Net interest spread | 2.32 | 2.32 | 2.83 | ||||||||||||||||||||||||
Impact of noninterest-bearing sources | 0.50 | 0.48 | 0.35 | ||||||||||||||||||||||||
Net interest income/yield on earning assets | $ | 8,103 | 2.82 | % | $ | 7,973 | 2.80 | % | $ | 7,954 | 3.18 | % | |||||||||||||||
(1) | Nonperforming loans are included in the respective average loan balances. Income on these nonperforming loans is recognized on a cash basis. |
(2) | Includes consumer finance of $2,916 million and $3,063 million in the fourth and third quarters of 2005, and $3,473 million in the fourth quarter of 2004; foreign consumer of $3,682 million and $3,541 million in the fourth and third quarters of 2005, and $3,523 million in the fourth quarter of 2004; and consumer lease financing of $55 million and $111 million in the fourth and third quarters of 2005, and $561 million in the fourth quarter of 2004. |
(3) | Interest income includes the impact of interest rate risk management contracts, which increased interest income on the underlying assets $40 million and $104 million in the fourth and third quarters of 2005, and $496 million in the fourth quarter of 2004. These amounts were substantially offset by corresponding decreases in the income earned on the underlying assets. Interest expense includes the impact of interest rate risk management contracts, which increased interest expense on the underlying liabilities $265 million and $252 million in the fourth and third quarters of 2005, and $155 million in the fourth quarter of 2004. These amounts were substantially offset by corresponding decreases in the interest paid on the underlying liabilities. |
(4) | Primarily consists of time deposits in denominations of $100,000 or more. |
7
Bank of America Corporation
Quarterly Average Balances and Interest Rates - Fully Taxable-equivalent Basis - Isolating Derivative Hedge
Income/Expense(1)
(Dollars in millions)
Fourth Quarter 2005 | Third Quarter 2005 | Fourth Quarter 2004 | |||||||||||||||||||||||||||
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) | $ | 14,619 | $ | 134 | 3.63 | % | $ | 14,498 | $ | 126 | 3.46 | % | $ | 15,620 | $ | 119 | 3.01 | % | |||||||||||
Federal funds sold and securities purchased under agreements to resell(2) | 165,908 | 1,539 | 3.70 | 176,650 | 1,459 | 3.29 | 149,226 | 674 | 1.80 | ||||||||||||||||||||
Trading account assets | 139,441 | 1,648 | 4.72 | 142,287 | 1,578 | 4.42 | 110,585 | 1,067 | 3.85 | ||||||||||||||||||||
Securities(2) | 221,411 | 2,843 | 5.13 | 225,952 | 2,823 | 4.99 | 171,173 | 2,084 | 4.87 | ||||||||||||||||||||
Loans and leases(3): | |||||||||||||||||||||||||||||
Residential mortgage (2) | 178,755 | 2,426 | 5.42 | 171,002 | 2,301 | 5.37 | 178,879 | 2,447 | 5.46 | ||||||||||||||||||||
Credit card | 56,858 | 1,747 | 12.19 | 55,271 | 1,651 | 11.85 | 49,366 | 1,351 | 10.88 | ||||||||||||||||||||
Home equity lines | 60,571 | 1,012 | 6.63 | 58,046 | 910 | 6.22 | 48,336 | 609 | 5.01 | ||||||||||||||||||||
Direct/Indirect consumer | 47,181 | 703 | 5.91 | 47,900 | 702 | 5.81 | 39,526 | 551 | 5.55 | ||||||||||||||||||||
Other consumer(4) | 6,653 | 184 | 11.01 | 6,715 | 170 | 10.05 | 7,557 | 153 | 8.07 | ||||||||||||||||||||
Total consumer | 350,018 | 6,072 | 6.90 | 338,934 | 5,734 | 6.73 | 323,664 | 5,111 | 6.29 | ||||||||||||||||||||
Commercial - domestic(2) | 137,224 | 2,167 | 6.26 | 127,044 | 1,897 | 5.93 | 121,412 | 1,418 | 4.65 | ||||||||||||||||||||
Commercial real estate | 36,017 | 597 | 6.58 | 34,663 | 542 | 6.20 | 31,355 | 392 | 4.98 | ||||||||||||||||||||
Commercial lease financing | 20,178 | 241 | 4.79 | 20,402 | 239 | 4.69 | 20,204 | 254 | 5.01 | ||||||||||||||||||||
Commercial - foreign(2) | 20,143 | 378 | 7.44 | 18,444 | 349 | 7.50 | 18,828 | 271 | 5.73 | ||||||||||||||||||||
Total commercial | 213,562 | 3,383 | 6.29 | 200,553 | 3,027 | 5.99 | 191,799 | 2,335 | 4.85 | ||||||||||||||||||||
Total loans and leases | 563,580 | 9,455 | 6.67 | 539,487 | 8,761 | 6.46 | 515,463 | 7,446 | 5.76 | ||||||||||||||||||||
Other earning assets | 40,582 | 614 | 6.01 | 38,745 | 571 | 5.87 | 35,937 | 516 | 5.73 | ||||||||||||||||||||
Total earning assets - Excluding hedge impact | 1,145,541 | 16,233 | 5.64 | 1,137,619 | 15,318 | 5.36 | 998,004 | 11,906 | 4.76 | ||||||||||||||||||||
Net derivative income (expense) on assets | 40 | 104 | 496 | ||||||||||||||||||||||||||
Total earning assets - Including hedge impact | 1,145,541 | 16,273 | 5.66 | 1,137,619 | 15,422 | 5.40 | 998,004 | 12,402 | 4.96 | ||||||||||||||||||||
Cash and cash equivalents | 33,693 | 32,969 | 31,028 | ||||||||||||||||||||||||||
Other assets, less allowance for loan and lease losses | 125,815 | 124,157 | 123,519 | ||||||||||||||||||||||||||
Total assets | $ | 1,305,049 | $ | 1,294,745 | $ | 1,152,551 | |||||||||||||||||||||||
Interest-bearing liabilities | |||||||||||||||||||||||||||||
Domestic interest-bearing deposits: | |||||||||||||||||||||||||||||
Savings | $ | 35,535 | $ | 68 | 0.76 | % | $ | 35,853 | $ | 56 | 0.62 | % | $ | 36,927 | $ | 36 | 0.39 | % | |||||||||||
NOW and money market deposit accounts (2) | 224,122 | 722 | 1.28 | 224,341 | 742 | 1.31 | 234,596 | 547 | 0.93 | ||||||||||||||||||||
Consumer CDs and IRAs (2) | 120,321 | 827 | 2.73 | 130,975 | 889 | 2.69 | 109,243 | 539 | 1.96 | ||||||||||||||||||||
Negotiable CDs, public funds and other time deposits (2) | 5,085 | 26 | 2.02 | 4,414 | 34 | 3.02 | 7,563 | 38 | 2.03 | ||||||||||||||||||||
Total domestic interest-bearing deposits | 385,063 | 1,643 | 1.69 | 395,583 | 1,721 | 1.73 | 388,329 | 1,160 | 1.19 | ||||||||||||||||||||
Foreign interest-bearing deposits(5): | |||||||||||||||||||||||||||||
Banks located in foreign countries(2) | 24,451 | 327 | 5.30 | 19,707 | 259 | 5.21 | 17,953 | 157 | 3.47 | ||||||||||||||||||||
Governments and official institutions | 7,579 | 73 | 3.84 | 7,317 | 62 | 3.37 | 5,843 | 33 | 2.21 | ||||||||||||||||||||
Time, savings and other | 32,624 | 203 | 2.46 | 32,024 | 177 | 2.19 | 30,459 | 104 | 1.36 | ||||||||||||||||||||
Total foreign interest-bearing deposits | 64,654 | 603 | 3.70 | 59,048 | 498 | 3.35 | 54,255 | 294 | 2.15 | ||||||||||||||||||||
Total interest-bearing deposits | 449,717 | 2,246 | 1.98 | 454,631 | 2,219 | 1.94 | 442,584 | 1,454 | 1.31 | ||||||||||||||||||||
Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings(2) | 364,140 | 3,788 | 4.13 | 339,980 | 3,085 | 3.60 | 252,413 | 1,386 | 2.18 | ||||||||||||||||||||
Trading account liabilities | 56,880 | 619 | 4.32 | 68,132 | 707 | 4.12 | 37,387 | 352 | 3.74 | ||||||||||||||||||||
Long-term debt(2) | 100,334 | 1,252 | 4.99 | 99,576 | 1,186 | 4.76 | 99,559 | 1,101 | 4.42 | ||||||||||||||||||||
Total interest-bearing liabilities - Excluding hedge impact | 971,071 | 7,905 | 3.23 | 962,319 | 7,197 | 2.97 | 831,943 | 4,293 | 2.05 | ||||||||||||||||||||
Net derivative (income) expense on liabilities | 265 | 252 | 155 | ||||||||||||||||||||||||||
Total interest-bearing liabilities - Including hedge impact | 971,071 | 8,170 | 3.34 | 962,319 | 7,449 | 3.08 | 831,943 | 4,448 | 2.13 | ||||||||||||||||||||
Noninterest-bearing sources: | |||||||||||||||||||||||||||||
Noninterest-bearing deposits | 179,205 | 178,140 | 167,352 | ||||||||||||||||||||||||||
Other liabilities | 55,293 | 53,832 | 55,156 | ||||||||||||||||||||||||||
Shareholders’ equity | 99,480 | 100,454 | 98,100 | ||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,305,049 | $ | 1,294,745 | $ | 1,152,551 | |||||||||||||||||||||||
Net interest spread | 2.41 | 2.39 | 2.71 | ||||||||||||||||||||||||||
Impact of noninterest-bearing sources | 0.49 | 0.46 | 0.33 | ||||||||||||||||||||||||||
Net interest income/yield on earning assets - excluding hedge impact | $ | 8,328 | 2.90 | $ | 8,121 | 2.85 | $ | 7,613 | 3.04 | ||||||||||||||||||||
Net impact of derivative hedge income/(expense) | (225 | ) | (0.08 | ) | (148 | ) | (0.05 | ) | 341 | 0.14 | |||||||||||||||||||
Net interest income/yield on earning assets | $ | 8,103 | 2.82 | % | $ | 7,973 | 2.80 | % | $ | 7,954 | 3.18 | % | |||||||||||||||||
(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. |
(2) | Interest income excludes the impact of interest rate risk management contracts, which increased(decreased) interest income on time deposits placed and other short-term investments $(2) million, federal funds sold and securities purchased under agreements to resell $(77) million, securities $2 million, residential mortgage $(4) million, commercial - domestic $139 million and other earning assets $(18) million in the three months ended December 31, 2005. Interest expense excludes the impact of interest rate risk management contracts which increased(decreased) interest expense on NOW and money market deposit accounts $(1) million, consumer CDs and IRAs $160 million, negotiable CDs, public funds and other time deposits $1 million, banks located in foreign countries $28 million, federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings $114 million and long-term debt $(37) million in the three months ended December 31, 2005. |
Interest income excludes the impact of interest rate risk management contracts, which increased(decreased) interest income on time deposits placed and other short-term investments $(1) million, federal funds sold and securities purchased under agreements to resell $(87) million, securities $1 million, residential mortgage $(7) million, commercial - domestic $227 million and other earning assets $(29) million in the three months ended September 30, 2005. Interest expense excludes the impact of interest rate risk management contracts which increased(decreased) interest expense on NOW and money market deposit accounts $1 million, consumer CDs and IRAs $168 million, negotiable CDs, public funds and other time deposits $16 million, banks located in foreign countries $35 million, federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings $165 million and long-term debt $(133) million in the three months ended September 30, 2005.
Interest income excludes the impact of interest rate risk management contracts, which increased(decreased) interest income on time deposits placed and other short-term investments $9 million, federal funds sold and securities purchased under agreements to resell $38 million, securities $(1) million, residential mortgage $12 million, commercial - domestic $496 million, commercial - foreign $1 million, and other earning assets $(59) million in the three months ended December 31, 2004. Interest expense excludes the impact of interest rate risk management contracts which increased(decreased) interest expense on NOW and money market deposit accounts $42 million, consumer CDs and IRAs $172 million, negotiable CDs, public funds and other time deposits $43 million, banks located in foreign countries $118 million, federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings $157 million and long-term debt $(377) million in the three months ended December 31, 2004.
(3) | Nonperforming loans are included in the respective average loan balances. Income on these nonperforming loans is recognized on a cash basis. |
(4) | Includes consumer finance of $2,916 million and $3,063 million in the fourth and third quarters of 2005, and $3,473 million in the fourth quarter of 2004; foreign consumer of $3,682 million and $3,541 million in the fourth and third quarters of 2005, and $3,523 million in the fourth quarter of 2004; and consumer lease financing of $55 million and $111 million in the fourth and third quarters of 2005, and $561 million in the fourth quarter of 2004. |
(5) | Primarily consists of time deposits in denominations of $100,000 or more. |
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
8
Bank of America Corporation
Year-to-Date Average Balances and Interest Rates - Fully Taxable-equivalent Basis
(Dollars in millions)
Year Ended December 31 | ||||||||||||||||||
2005 | 2004 | |||||||||||||||||
Average Balance | Interest Income/ Expense | Yield/ Rate | Average Balance | Interest Income/ Expense | Yield/ Rate | |||||||||||||
Earning assets | ||||||||||||||||||
Time deposits placed and other short-term investments | $ | 14,286 | $ | 472 | 3.30 | % | $ | 14,254 | $ | 362 | 2.54 | % | ||||||
Federal funds sold and securities purchased under agreements to resell | 169,132 | 4,979 | 2.94 | 128,981 | 2,043 | 1.58 | ||||||||||||
Trading account assets | 133,502 | 5,883 | 4.41 | 104,616 | 4,092 | 3.91 | ||||||||||||
Securities | 219,843 | 11,059 | 5.03 | 150,171 | 7,326 | 4.88 | ||||||||||||
Loans and leases(1): | ||||||||||||||||||
Residential mortgage | 173,776 | 9,400 | 5.41 | 167,298 | 9,074 | 5.42 | ||||||||||||
Credit card | 53,997 | 6,253 | 11.58 | 43,435 | 4,653 | 10.71 | ||||||||||||
Home equity lines | 56,289 | 3,412 | 6.06 | 39,400 | 1,835 | 4.66 | ||||||||||||
Direct/Indirect consumer | 44,981 | 2,589 | 5.75 | 38,078 | 2,093 | 5.50 | ||||||||||||
Other consumer(2) | 6,908 | 667 | 9.67 | 7,717 | 594 | 7.70 | ||||||||||||
Total consumer | 335,951 | 22,321 | 6.64 | 295,928 | 18,249 | 6.17 | ||||||||||||
Commercial - domestic | 128,034 | 8,383 | 6.55 | 114,644 | 7,123 | 6.21 | ||||||||||||
Commercial real estate | 34,304 | 2,046 | 5.97 | 28,085 | 1,263 | 4.50 | ||||||||||||
Commercial lease financing | 20,441 | 992 | 4.85 | 17,483 | 819 | 4.68 | ||||||||||||
Commercial - foreign | 18,491 | 1,291 | 6.98 | 16,505 | 849 | 5.15 | ||||||||||||
Total commercial | 201,270 | 12,712 | 6.32 | 176,717 | 10,054 | 5.69 | ||||||||||||
Total loans and leases | 537,221 | 35,033 | 6.52 | 472,645 | 28,303 | 5.99 | ||||||||||||
Other earning assets | 38,013 | 2,103 | 5.53 | 34,635 | 1,815 | 5.24 | ||||||||||||
Total earning assets(3) | 1,111,997 | 59,529 | 5.35 | 905,302 | 43,941 | 4.85 | ||||||||||||
Cash and cash equivalents | 33,199 | 28,511 | ||||||||||||||||
Other assets, less allowance for loan and lease losses | 124,700 | 110,847 | ||||||||||||||||
Total assets | $ | 1,269,896 | $ | 1,044,660 | ||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||
Domestic interest-bearing deposits: | ||||||||||||||||||
Savings | $ | 36,602 | $ | 211 | 0.58 | % | $ | 33,959 | $ | 119 | 0.35 | % | ||||||
NOW and money market deposit accounts | 227,722 | 2,839 | 1.25 | 214,542 | 1,921 | 0.90 | ||||||||||||
Consumer CDs and IRAs | 124,385 | 3,786 | 3.04 | 94,770 | 2,533 | 2.67 | ||||||||||||
Negotiable CDs, public funds and other time deposits | 6,865 | 259 | 3.77 | 5,977 | 290 | 4.85 | ||||||||||||
Total domestic interest-bearing deposits | 395,574 | 7,095 | 1.79 | 349,248 | 4,863 | 1.39 | ||||||||||||
Foreign interest-bearing deposits(4): | ||||||||||||||||||
Banks located in foreign countries | 22,945 | 1,301 | 5.67 | 18,426 | 1,040 | 5.64 | ||||||||||||
Governments and official institutions | 7,418 | 238 | 3.21 | 5,327 | 97 | 1.82 | ||||||||||||
Time, savings and other | 31,603 | 661 | 2.09 | 27,739 | 275 | 0.99 | ||||||||||||
Total foreign interest-bearing deposits | 61,966 | 2,200 | 3.55 | 51,492 | 1,412 | 2.74 | ||||||||||||
Total interest-bearing deposits | 457,540 | 9,295 | 2.03 | 400,740 | 6,275 | 1.57 | ||||||||||||
Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings | 326,408 | 11,798 | 3.61 | 227,565 | 4,434 | 1.95 | ||||||||||||
Trading account liabilities | 57,689 | 2,364 | 4.10 | 35,326 | 1,317 | 3.73 | ||||||||||||
Long-term debt | 98,610 | 4,083 | 4.14 | 93,323 | 2,404 | 2.58 | ||||||||||||
Total interest-bearing liabilities(3) | 940,247 | 27,540 | 2.93 | 756,954 | 14,430 | 1.91 | ||||||||||||
Noninterest-bearing sources: | ||||||||||||||||||
Noninterest-bearing deposits | 174,892 | 150,819 | ||||||||||||||||
Other liabilities | 55,461 | 52,704 | ||||||||||||||||
Shareholders’ equity | 99,296 | 84,183 | ||||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,269,896 | $ | 1,044,660 | ||||||||||||||
Net interest spread | 2.42 | 2.94 | ||||||||||||||||
Impact of noninterest-bearing sources | 0.46 | 0.32 | ||||||||||||||||
Net interest income/yield on earning assets | $ | 31,989 | 2.88 | % | $ | 29,511 | 3.26 | % | ||||||||||
(1) | Nonperforming loans are included in the respective average loan balances. Income on such nonperforming loans is recognized on a cash basis. |
(2) | Includes consumer finance of $3,137 million and $3,735 million; foreign consumer of $3,565 million and $3,020 million; and consumer lease financing of $206 million and $962 million in 2005 and 2004. |
(3) | Interest income includes the impact of interest rate risk management contracts, which increased interest income on the underlying assets $774 million and $2,400 million in 2005 and 2004. These amounts were substantially offset by corresponding decreases in the income earned on the underlying assets. Interest expense includes the impact of interest rate risk management contracts, which increased interest expense on the underlying liabilities $985 million and $888 million in 2005 and 2004. These amounts were substantially offset by corresponding decreases in the interest paid on the underlying liabilities. |
(4) | Primarily consists of time deposits in denominations of $100,000 or more. |
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
9
Bank of America Corporation
Year-to-Date Average Balances and Interest Rates - Fully Taxable-equivalent Basis - Isolating Derivative Hedge Income/Expense(1)
(Dollars in millions)
Year Ended December 31 | |||||||||||||||||||
2005 | 2004 | ||||||||||||||||||
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) | $ | 14,286 | $ | 476 | 3.33 | % | $ | 14,254 | $ | 352 | 2.47 | % | |||||||
Federal funds sold and securities purchased under agreements to resell(2) | 169,132 | 5,116 | 3.02 | 128,981 | 1,660 | 1.29 | |||||||||||||
Trading account assets | 133,502 | 5,883 | 4.41 | 104,616 | 4,092 | 3.91 | |||||||||||||
Securities(2) | 219,843 | 11,058 | 5.03 | 150,171 | 7,343 | 4.89 | |||||||||||||
Loans and leases(3): | |||||||||||||||||||
Residential mortgage(2) | 173,776 | 9,404 | 5.41 | 167,298 | 9,049 | 5.41 | |||||||||||||
Credit card | 53,997 | 6,253 | 11.58 | 43,435 | 4,653 | 10.71 | |||||||||||||
Home equity lines | 56,289 | 3,412 | 6.06 | 39,400 | 1,835 | 4.66 | |||||||||||||
Direct/Indirect consumer | 44,981 | 2,589 | 5.75 | 38,078 | 2,093 | 5.50 | |||||||||||||
Other consumer(4) | 6,908 | 667 | 9.67 | 7,717 | 594 | 7.70 | |||||||||||||
Total consumer | 335,951 | 22,325 | 6.65 | 295,928 | 18,224 | 6.16 | |||||||||||||
Commercial - domestic(2) | 128,034 | 7,324 | 5.72 | 114,644 | 4,870 | 4.25 | |||||||||||||
Commercial real estate | 34,304 | 2,046 | 5.97 | 28,085 | 1,263 | 4.50 | |||||||||||||
Commercial lease financing | 20,441 | 992 | 4.85 | 17,483 | 819 | 4.68 | |||||||||||||
Commercial - foreign(2) | 18,491 | 1,288 | 6.97 | 16,505 | 841 | 5.10 | |||||||||||||
Total commercial | 201,270 | 11,650 | 5.79 | 176,717 | 7,793 | 4.41 | |||||||||||||
Total loans and leases | 537,221 | 33,975 | 6.32 | 472,645 | 26,017 | 5.50 | |||||||||||||
Other earning assets(2) | 38,013 | 2,247 | 5.91 | 34,635 | 2,077 | 6.00 | |||||||||||||
Total earning assets - Excluding hedge impact | 1,111,997 | 58,755 | 5.28 | 905,302 | 41,541 | 4.59 | |||||||||||||
Net derivative income (expense) on assets | 774 | 2,400 | |||||||||||||||||
Total earning assets - Including hedge impact | 1,111,997 | 59,529 | 5.35 | 905,302 | 43,941 | 4.85 | |||||||||||||
Cash and cash equivalents | 33,199 | 28,511 | |||||||||||||||||
Other assets, less allowance for loan and lease losses | 124,700 | 110,847 | |||||||||||||||||
Total assets | $ | 1,269,896 | $ | 1,044,660 | |||||||||||||||
Interest-bearing liabilities | |||||||||||||||||||
Domestic interest-bearing deposits: | |||||||||||||||||||
Savings | $ | 36,602 | $ | 211 | 0.58 | % | $ | 33,959 | $ | 119 | 0.35 | % | |||||||
NOW and money market deposit accounts(2) | 227,722 | 2,821 | 1.25 | 214,542 | 1,678 | 0.79 | |||||||||||||
Consumer CDs and IRAs(2) | 124,385 | 3,151 | 2.53 | 94,770 | 1,660 | 1.75 | |||||||||||||
Negotiable CDs, public funds and other time deposits(2) | 6,865 | 188 | 2.74 | 5,977 | 93 | 1.55 | |||||||||||||
Total domestic interest-bearing deposits | 395,574 | 6,371 | 1.62 | 349,248 | 3,550 | 1.02 | |||||||||||||
Foreign interest-bearing deposits(5): | |||||||||||||||||||
Banks located in foreign countries(2) | 22,945 | 1,055 | 4.60 | 18,426 | 539 | 2.92 | |||||||||||||
Governments and official institutions | 7,418 | 238 | 3.21 | 5,327 | 97 | 1.82 | |||||||||||||
Time, savings and other | 31,603 | 661 | 2.09 | 27,739 | 275 | 0.99 | |||||||||||||
Total foreign interest-bearing deposits | 61,966 | 1,954 | 3.15 | 51,492 | 911 | 1.77 | |||||||||||||
Total interest-bearing deposits | 457,540 | 8,325 | 1.83 | 400,740 | 4,461 | 1.12 | |||||||||||||
Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings(2) | 326,408 | 11,190 | 3.43 | 227,565 | 3,746 | 1.65 | |||||||||||||
Trading account liabilities | 57,689 | 2,364 | 4.10 | 35,326 | 1,317 | 3.73 | |||||||||||||
Long-term debt(2) | 98,610 | 4,676 | 4.74 | 93,323 | 4,018 | 4.31 | |||||||||||||
Total interest-bearing liabilities - Excluding hedge impact | 940,247 | 26,555 | 2.83 | 756,954 | 13,542 | 1.79 | |||||||||||||
Net derivative (income) expense on liabilities | 985 | 888 | |||||||||||||||||
Total interest-bearing liabilities - Including hedge impact | 940,247 | 27,540 | 2.93 | 756,954 | 14,430 | 1.91 | |||||||||||||
Noninterest-bearing sources: | |||||||||||||||||||
Noninterest-bearing deposits | 174,892 | 150,819 | |||||||||||||||||
Other liabilities | 55,461 | 52,704 | |||||||||||||||||
Shareholders’ equity | 99,296 | 84,183 | |||||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,269,896 | $ | 1,044,660 | |||||||||||||||
Net interest spread | 2.45 | 2.80 | |||||||||||||||||
Impact of noninterest-bearing sources | 0.45 | 0.29 | |||||||||||||||||
Net interest income/yield on earning assets - excluding hedge impact | 32,200 | 2.90 | % | 27,999 | 3.09 | % | |||||||||||||
Net impact of derivative hedge income/(expense) | (211 | ) | (0.02 | ) | 1,512 | 0.17 | |||||||||||||
Net interest income/yield on earning assets | $ | 31,989 | 2.88 | % | $ | 29,511 | 3.26 | % | |||||||||||
(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. |
(2) | Interest income excludes the impact of interest rate risk management contracts, which increased(decreased) interest income on time deposits placed and other short-term investments $(4) million, federal funds sold and securities purchased under agreements to resell $(137) million, securities $1 million, residential mortgage $(4) million, commercial - domestic $1,059 million, commercial - foreign $3 million and other earning assets $(144) million in 2005. Interest expense excludes the impact of interest rate risk management contracts which increased(decreased) interest expense on NOW and money market deposit accounts $18 million, consumer CDs and IRAs $635 million, negotiable CDs, public funds and other time deposits $71 million, banks located in foreign countries $246 million, federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings $608 million and long-term debt $(593) million in 2005. Interest income excludes the impact of interest rate risk management contracts, which increased(decreased) interest income on time deposits placed and other short-term investments $10 million, federal funds sold and securities purchased under agreements to resell $383 million, securities $(17) million, residential mortgage $25 million, commercial - domestic $2,253 million, commercial - foreign $8 million and other earning assets $(262) million in 2004. Interest expense excludes the impact of interest rate risk management contracts which increased(decreased) interest expense on NOW and money market deposit accounts $243 million, consumer CDs and IRAs $873 million, negotiable CDs, public funds and other time deposits $197 million, banks located in foreign countries $501 million, federal funds purchased, securities sold under agreements to repurchase and other short term borrowings $688 million and long-term debt $(1,614) million in 2004. |
(3) | Nonperforming loans are included in the respective average loan balances. Income on such nonperforming loans is recognized on a cash basis. |
(4) | Includes consumer finance of $3,137 million and $3,735 million; foreign consumer of $3,565 million and $3,020 million; and consumer lease financing of $206 million and $962 million in 2005 and 2004. |
(5) | Primarily consists of time deposits in denominations of $100,000 or more. |
Information for period after April 1, 2004 includes the FleetBoston acqusition; prior periods have not been restated.
10
Bank of America Corporation
Business Segment View
Net Income
Fourth Quarter 2005
Revenue*
Fourth Quarter 2005
* | Fully taxable-equivalent basis |
11
Bank of America Corporation
Global Consumer and Small Business Banking Segment Results(1)
(Dollars in millions; except as noted)
Year Ended December 31 | Fourth 2005 | Third 2005 | Second 2005 | First 2005 | Fourth 2004 | |||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||||||
Net interest income(2) | $ | 17,053 | $ | 15,911 | $ | 4,373 | $ | 4,271 | $ | 4,142 | $ | 4,267 | $ | 4,301 | ||||||||||||||
Noninterest income | ||||||||||||||||||||||||||||
Service charges | 4,996 | 4,329 | 1,261 | 1,386 | 1,244 | 1,105 | 1,192 | |||||||||||||||||||||
Mortgage banking income | 1,012 | 589 | 271 | 230 | 237 | 274 | 206 | |||||||||||||||||||||
Card income | 5,476 | 4,359 | 1,427 | 1,447 | 1,372 | 1,230 | 1,316 | |||||||||||||||||||||
All other income | 339 | (32 | ) | 97 | 70 | 63 | 109 | 105 | ||||||||||||||||||||
Total noninterest income | 11,823 | 9,245 | 3,056 | 3,133 | 2,916 | 2,718 | 2,819 | |||||||||||||||||||||
Total revenue(2) | 28,876 | 25,156 | 7,429 | 7,404 | 7,058 | 6,985 | 7,120 | |||||||||||||||||||||
Provision for credit losses | 4,271 | 3,333 | 1,299 | 1,107 | 1,155 | 710 | 1,244 | |||||||||||||||||||||
Gains (losses) on sales of debt securities | (2 | ) | 117 | — | (1 | ) | — | (1 | ) | — | ||||||||||||||||||
Noninterest expense | 13,440 | 12,555 | 3,394 | 3,327 | 3,413 | 3,306 | 3,373 | |||||||||||||||||||||
Income before income taxes | 11,163 | 9,385 | 2,736 | 2,969 | 2,490 | 2,968 | 2,503 | |||||||||||||||||||||
Income tax expense | 4,007 | 3,414 | 974 | 1,085 | 899 | 1,049 | 894 | |||||||||||||||||||||
Net income | $ | 7,156 | $ | 5,971 | $ | 1,762 | $ | 1,884 | $ | 1,591 | $ | 1,919 | $ | 1,609 | ||||||||||||||
Shareholder value added | $ | 4,013 | $ | 3,325 | $ | 904 | $ | 1,113 | $ | 823 | $ | 1,173 | $ | 807 | ||||||||||||||
Net interest yield(2) | 5.63 | % | 5.46 | % | 5.74 | % | 5.58 | % | 5.53 | % | 5.67 | % | 5.48 | % | ||||||||||||||
Return on average equity | 21.31 | 21.28 | 19.58 | 22.81 | 19.29 | 23.76 | 18.75 | |||||||||||||||||||||
Efficiency ratio(2) | 46.54 | 49.91 | 45.65 | 44.95 | 48.34 | 47.35 | 47.37 | |||||||||||||||||||||
Balance Sheet | ||||||||||||||||||||||||||||
Average | ||||||||||||||||||||||||||||
Total loans and leases | $ | 144,019 | $ | 122,148 | $ | 149,239 | $ | 145,715 | $ | 141,353 | $ | 139,644 | $ | 138,010 | ||||||||||||||
Total earning assets | 302,846 | 291,212 | 302,115 | 303,547 | 300,571 | 305,179 | 311,991 | |||||||||||||||||||||
Total assets | 330,342 | 316,204 | 329,898 | 330,808 | 327,079 | 333,621 | 341,169 | |||||||||||||||||||||
Total deposits | 306,038 | 283,481 | 306,602 | 310,495 | 306,399 | 300,541 | 301,829 | |||||||||||||||||||||
Common equity/Allocated equity | 33,589 | 28,057 | 35,725 | 32,776 | 33,083 | 32,747 | 34,153 | |||||||||||||||||||||
Period End | ||||||||||||||||||||||||||||
Total loans and leases | 151,646 | 139,507 | 151,646 | 147,702 | 143,083 | 138,873 | 139,507 | |||||||||||||||||||||
Total assets | 335,551 | 336,902 | 335,551 | 330,995 | 328,839 | 335,802 | 336,902 | |||||||||||||||||||||
Total deposits | 306,083 | 299,062 | 306,083 | 313,109 | 307,314 | 306,029 | 299,062 | |||||||||||||||||||||
Period End (in billions) | ||||||||||||||||||||||||||||
Mortgage servicing portfolio | $ | 296.8 | $ | 273.1 | $ | 296.8 | $ | 288.5 | $ | 280.1 | $ | 275.5 | $ | 273.1 | ||||||||||||||
Mortgage originations: | ||||||||||||||||||||||||||||
Retail | 60.3 | 57.6 | 14.7 | 18.6 | 15.1 | 11.9 | 12.7 | |||||||||||||||||||||
Wholesale | 26.5 | 30.0 | 6.0 | 8.9 | 6.0 | 5.6 | 5.7 |
(1) | Global Consumer and Small Business Banking’s most significant product groups are Card Services, Consumer Real Estate and Consumer Deposit Products. |
(2) | Fully taxable-equivalent basis |
Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.
Information for period after April 1, 2004 includes the FleetBoston acqusition; prior periods have not been restated.
12
Bank of America Corporation
E-Commerce & BankofAmerica.com
Bank of America has the largest active online banking customer base with 14.7 million subscribers.
Bank of America uses a strict Active User standard—customers must have used our online services within the last 90 days.
7.3 millionactive bill pay users paid $34.4 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 338 companies are presenting 19.1 million e-bills per quarter.
13
Bank of America Corporation
Card Services Results(1)
(Dollars in millions)
Year Ended December 31 | Fourth 2005 | Third 2005 | Second 2005 | First 2005 | Fourth 2004 | |||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||||||
Key Measures | ||||||||||||||||||||||||||||
Consumer Credit Card Outstandings | ||||||||||||||||||||||||||||
On-balance sheet (Period end) | $ | 58,548 | $ | 51,726 | $ | 58,548 | $ | 56,079 | $ | 53,863 | $ | 51,012 | $ | 51,726 | ||||||||||||||
Managed (Period end) | 60,785 | 58,629 | 60,785 | 59,701 | 59,283 | 57,920 | 58,629 | |||||||||||||||||||||
On-balance sheet (Average) | 53,997 | 43,435 | 56,858 | 55,271 | 52,474 | 51,310 | 49,366 | |||||||||||||||||||||
Managed (Average) | 59,048 | 50,296 | 59,722 | 59,762 | 58,537 | 58,145 | 56,444 | |||||||||||||||||||||
Managed Income Statement | ||||||||||||||||||||||||||||
Total revenue | $ | 9,392 | $ | 8,140 | $ | 2,383 | $ | 2,428 | $ | 2,338 | $ | 2,243 | $ | 2,354 | ||||||||||||||
Provision for credit losses(2) | 4,433 | 3,636 | 1,254 | 1,102 | 1,234 | 843 | 1,396 | |||||||||||||||||||||
Noninterest expense | 2,650 | 2,172 | 619 | 635 | 720 | 676 | 700 | |||||||||||||||||||||
Income before income taxes | $ | 2,309 | $ | 2,332 | $ | 510 | $ | 691 | $ | 384 | $ | 724 | $ | 258 | ||||||||||||||
Shareholder Value Added | $ | 979 | $ | 1,113 | $ | 186 | $ | 314 | $ | 123 | $ | 356 | $ | 55 | ||||||||||||||
Merchant Acquiring Business | ||||||||||||||||||||||||||||
Processing volume (millions) | 352,938 | 145,093 | 101,601 | 91,321 | 84,262 | 75,754 | 75,383 | |||||||||||||||||||||
Total transactions (millions) | 7,692 | 2,781 | 2,334 | 1,906 | 1,832 | 1,620 | 1,756 | |||||||||||||||||||||
Consumer Credit Card | ||||||||||||||||||||||||||||
Credit Quality | ||||||||||||||||||||||||||||
On-balance sheet | ||||||||||||||||||||||||||||
Charge-offs $ | $ | 3,652 | $ | 2,305 | $ | 1,366 | $ | 772 | $ | 774 | $ | 740 | $ | 691 | ||||||||||||||
Charge-offs % | 6.76 | % | 5.31 | % | 9.53 | % | 5.55 | % | 5.91 | % | 5.85 | % | 5.57 | % | ||||||||||||||
Managed | ||||||||||||||||||||||||||||
Losses $(3) | $ | 4,086 | $ | 2,829 | $ | 1,429 | $ | 864 | $ | 909 | $ | 884 | $ | 837 | ||||||||||||||
Losses % | 6.92 | % | 5.62 | % | 9.49 | % | 5.74 | % | 6.23 | % | 6.17 | % | 5.90 | % | ||||||||||||||
Managed delinquency % | ||||||||||||||||||||||||||||
30+ | n/a | n/a | 4.17 | % | 4.59 | % | 4.25 | % | 4.20 | % | 4.37 | % | ||||||||||||||||
90+ | n/a | n/a | 2.00 | 2.17 | 1.96 | 2.10 | 2.13 |
n/a = not applicable
(1) | Card Services includes Consumer and Small Business Credit Card and Merchant Services. |
(2) | Includes $210 million and $165 million for the year ended December 31, 2005 and 2004; $210 million for the three months ended June 30, 2005 and $165 million for the three months ended December 31,2004 related to minimum payment requirements. |
(3) | The three months ended December 31, 2005 includes $524 million increased losses due to bankruptcy reform legislation. |
The difference between the held and managed information above is the impact of the securitized portfolio.
Represents financial statement presentation with certain reclassifications to reflect securitization activity.
Certain prior period amounts have been reclassified among the segments to conform to the current period classification.
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
14
Bank of America Corporation
Global Business and Financial Services Segment Results(1)
(Dollars in millions)
Year Ended December 31 | Fourth 2005 | Third 2005 | Second 2005 | First 2005 | Fourth 2004 | |||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||||||
Net interest income(2) | $ | 7,788 | $ | 6,534 | $ | 2,027 | $ | 1,959 | $ | 1,896 | $ | 1,906 | $ | 1,861 | ||||||||||||||
Noninterest income | ||||||||||||||||||||||||||||
Service charges | 1,469 | 1,287 | 363 | 377 | 362 | 367 | 362 | |||||||||||||||||||||
Investment & brokerage services | 221 | 168 | 60 | 64 | 49 | 48 | 51 | |||||||||||||||||||||
All other income | 1,682 | 1,262 | 449 | 455 | 376 | 402 | 444 | |||||||||||||||||||||
Total noninterest income | 3,372 | 2,717 | 872 | 896 | 787 | 817 | 857 | |||||||||||||||||||||
Total revenue(2) | 11,160 | 9,251 | 2,899 | 2,855 | 2,683 | 2,723 | 2,718 | |||||||||||||||||||||
Provision for credit losses | (49 | ) | (442 | ) | 105 | 79 | (189 | ) | (44 | ) | (286 | ) | ||||||||||||||||
Gains on sales of debt securities | 146 | — | 63 | 12 | 70 | 1 | — | |||||||||||||||||||||
Noninterest expense | 4,162 | 3,598 | 1,088 | 1,053 | 1,015 | 1,006 | 1,018 | |||||||||||||||||||||
Income before income taxes | 7,193 | 6,095 | 1,769 | 1,735 | 1,927 | 1,762 | 1,986 | |||||||||||||||||||||
Income tax expense | 2,631 | 2,251 | 634 | 633 | 701 | 663 | 771 | |||||||||||||||||||||
Net income | $ | 4,562 | $ | 3,844 | $ | 1,135 | $ | 1,102 | $ | 1,226 | $ | 1,099 | $ | 1,215 | ||||||||||||||
Shareholder value added | $ | 1,486 | $ | 1,297 | $ | 360 | $ | 333 | $ | 465 | $ | 328 | $ | 423 | ||||||||||||||
Net interest yield | 4.05 | % | 4.06 | % | 3.96 | % | 3.97 | % | 4.04 | % | 4.24 | % | 4.15 | % | ||||||||||||||
Return on average equity | 15.63 | 15.89 | 15.39 | 15.13 | 17.00 | 15.03 | 16.15 | |||||||||||||||||||||
Efficiency ratio(2) | 37.29 | 38.90 | 37.64 | 36.85 | 37.78 | 36.92 | 37.43 | |||||||||||||||||||||
Balance Sheet | ||||||||||||||||||||||||||||
Average | ||||||||||||||||||||||||||||
Total loans and leases | $ | 180,557 | $ | 151,725 | $ | 190,327 | $ | 183,937 | $ | 176,371 | $ | 171,347 | $ | 167,741 | ||||||||||||||
Total earning assets | 192,344 | 160,811 | 202,870 | 195,735 | 188,019 | 182,490 | 178,582 | |||||||||||||||||||||
Total assets | 222,584 | 184,771 | 233,818 | 225,796 | 218,077 | 212,376 | 208,315 | |||||||||||||||||||||
Total deposits | 106,951 | 93,254 | 107,575 | 107,963 | 106,625 | 105,607 | 105,737 | |||||||||||||||||||||
Common equity/Allocated equity | 29,182 | 24,193 | 29,229 | 28,911 | 28,940 | 29,654 | 29,935 | |||||||||||||||||||||
Period End | ||||||||||||||||||||||||||||
Total loans and leases | $ | 192,532 | $ | 170,698 | $ | 192,532 | $ | 187,581 | $ | 179,319 | $ | 174,550 | $ | 170,698 | ||||||||||||||
Total assets | 237,679 | 214,045 | 237,679 | 230,556 | 221,624 | 216,153 | 214,045 | |||||||||||||||||||||
Total deposits | 114,241 | 107,838 | 114,241 | 106,171 | 110,894 | 107,300 | 107,838 |
(1) | Global Business and Financial Services major businesses are Global Treasury Services, Middle Market Banking, Business Banking, Commercial Real Estate Banking, Leasing, Business Capital, Dealer Financial Services and Latin America. |
(2) | Fully taxable-equivalent basis |
Certain | prior period amounts have been reclassified among the segments to conform to the current period presentation. |
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
15
Bank of America Corporation
Global Capital Markets and Investment Banking Segment Results(1)
(Dollars in millions)
Year Ended December 31 | Fourth 2005 | Third 2005 | Second 2005 | First 2005 | Fourth 2004 | |||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||||||
Net interest income(2) | ||||||||||||||||||||||||||||
Core net interest income | $ | 1,854 | $ | 2,019 | $ | 427 | $ | 456 | $ | 454 | $ | 517 | $ | 540 | ||||||||||||||
Trading-related net interest income | 1,444 | 2,039 | 300 | 316 | 414 | 414 | 417 | |||||||||||||||||||||
Total net interest income | 3,298 | 4,058 | 727 | 772 | 868 | 931 | 957 | |||||||||||||||||||||
Noninterest income | ||||||||||||||||||||||||||||
Service charges | 1,146 | 1,287 | 278 | 293 | 293 | 282 | 319 | |||||||||||||||||||||
Investment & brokerage services | 806 | 705 | 207 | 198 | 208 | 193 | 179 | |||||||||||||||||||||
Investment banking income | 1,749 | 1,783 | 501 | 491 | 407 | 350 | 449 | |||||||||||||||||||||
Trading account profits | 1,664 | 1,023 | 216 | 484 | 258 | 706 | 233 | |||||||||||||||||||||
All other income | 346 | 190 | 17 | 85 | 80 | 164 | 57 | |||||||||||||||||||||
Total noninterest income | 5,711 | 4,988 | 1,219 | 1,551 | 1,246 | 1,695 | 1,237 | |||||||||||||||||||||
Total revenue(2) | 9,009 | 9,046 | 1,946 | 2,323 | 2,114 | 2,626 | 2,194 | |||||||||||||||||||||
Provision for credit losses | (244 | ) | (445 | ) | (7 | ) | (70 | ) | (60 | ) | (107 | ) | (198 | ) | ||||||||||||||
Gains (losses) on sales of debt securities | 117 | (10 | ) | 31 | 5 | 51 | 30 | 1 | ||||||||||||||||||||
Noninterest expense | 6,678 | 6,581 | 1,801 | 1,716 | 1,524 | 1,637 | 1,524 | |||||||||||||||||||||
Income before income taxes | 2,692 | 2,900 | 183 | 682 | 701 | 1,126 | 869 | |||||||||||||||||||||
Income tax expense | 956 | 976 | 60 | 248 | 252 | 396 | 280 | |||||||||||||||||||||
Net income | $ | 1,736 | $ | 1,924 | $ | 123 | $ | 434 | $ | 449 | $ | 730 | $ | 589 | ||||||||||||||
Shareholder value added | $ | 642 | $ | 873 | $ | (166 | ) | $ | 163 | $ | 185 | $ | 460 | $ | 303 | |||||||||||||
Net interest yield(2) | 0.92 | % | 1.47 | % | 0.78 | % | 0.83 | % | 0.93 | % | 1.18 | % | 1.24 | % | ||||||||||||||
Return on average equity | 16.73 | 19.34 | 4.51 | 16.90 | 17.91 | 28.46 | 21.73 | |||||||||||||||||||||
Efficiency ratio(2) | 74.13 | 72.76 | 92.61 | 73.86 | 72.10 | 62.30 | 69.46 | |||||||||||||||||||||
Balance Sheet | ||||||||||||||||||||||||||||
Average | ||||||||||||||||||||||||||||
Total loans and leases | $ | 34,353 | $ | 33,891 | $ | 38,768 | $ | 32,280 | $ | 31,647 | $ | 34,693 | $ | 33,896 | ||||||||||||||
Total earning assets | 358,466 | 275,569 | 368,380 | 371,229 | 374,277 | 319,299 | 305,976 | |||||||||||||||||||||
Total assets | 410,979 | 321,743 | 421,097 | 422,920 | 428,084 | 371,135 | 353,773 | |||||||||||||||||||||
Total deposits | 84,979 | 74,738 | 87,271 | 83,042 | 86,907 | 82,667 | 81,078 | |||||||||||||||||||||
Common equity/Allocated equity | 10,372 | 9,946 | 10,851 | 10,180 | 10,047 | 10,407 | 10,786 | |||||||||||||||||||||
Period End | ||||||||||||||||||||||||||||
Total loans and leases | 40,213 | 33,387 | 40,213 | 33,387 | 31,565 | 34,506 | 33,387 | |||||||||||||||||||||
Total assets | 395,900 | 303,897 | 395,900 | 371,861 | 383,749 | 377,647 | 303,897 | |||||||||||||||||||||
Total deposits | 86,144 | 76,986 | 86,144 | 80,428 | 80,985 | 76,684 | 76,986 |
(1) | Global Capital Markets and Investment Banking offers clients a comprehensive range of global capabilities through three financial services: Global Investment Banking, Global Credit Products and Global Treasury Services. |
(2) | Fully taxable-equivalent basis |
Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
16
Bank of America Corporation
Global Capital Markets and Investment Banking
(Dollars in millions)
Year Ended December 31 | Fourth 2005 | Third 2005 | Second 2005 | First 2005 | Fourth 2004 | ||||||||||||||||||||
2005 | 2004 | ||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||
Market-based trading-related revenue: | |||||||||||||||||||||||||
Debt | $ | 2,565 | $ | 2,967 | $ | 496 | $ | 711 | $ | 482 | $ | 876 | $ | 609 | |||||||||||
Equity | 1,201 | 862 | 236 | 363 | 265 | 337 | 249 | ||||||||||||||||||
Other | 136 | (100 | ) | (12 | ) | (78 | ) | 130 | 96 | (35 | ) | ||||||||||||||
Total market-based trading-related revenue | 3,902 | 3,729 | 720 | 996 | 877 | 1,309 | 823 | ||||||||||||||||||
Investment banking fees: | |||||||||||||||||||||||||
Debt | 1,180 | 1,291 | 343 | 308 | 277 | 252 | 315 | ||||||||||||||||||
Equity | 273 | 303 | 84 | 94 | 57 | 38 | 83 | ||||||||||||||||||
Mergers and acquisitions | 296 | 189 | 74 | 89 | 73 | 60 | 52 | ||||||||||||||||||
Total investment banking fees | 1,749 | 1,783 | 501 | 491 | 407 | 350 | 450 | ||||||||||||||||||
Other | 472 | 222 | 21 | 124 | 154 | 173 | 86 | ||||||||||||||||||
Capital markets revenue | 6,123 | 5,734 | 1,242 | 1,611 | 1,438 | 1,832 | 1,359 | ||||||||||||||||||
Other revenue: | |||||||||||||||||||||||||
Credit-related | 869 | 1,117 | 218 | 189 | 191 | 271 | 265 | ||||||||||||||||||
Global treasury services | 2,135 | 2,185 | 520 | 527 | 535 | 553 | 571 | ||||||||||||||||||
Total other revenue | 3,004 | 3,302 | 738 | 716 | 726 | 824 | 836 | ||||||||||||||||||
Total revenue | $ | 9,127 | $ | 9,036 | $ | 1,980 | $ | 2,327 | $ | 2,164 | $ | 2,656 | $ | 2,195 | |||||||||||
Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
17
Bank of America Corporation
Global Capital Markets and Investment Banking
(Dollars in millions)
Year Ended December 31 | Fourth 2005 | Third 2005 | Second 2005 | First 2005 | Fourth 2004 | ||||||||||||||||||||
2005 | 2004 | ||||||||||||||||||||||||
Trading-related Revenue and Equity Commissions | |||||||||||||||||||||||||
Net interest income(1) | $ | 1,444 | $ | 2,039 | $ | 300 | $ | 316 | $ | 414 | $ | 414 | $ | 417 | |||||||||||
Trading account profits | 1,664 | 1,023 | 216 | 484 | 258 | 706 | 233 | ||||||||||||||||||
Total trading-related revenue | 3,108 | 3,062 | 516 | 800 | 672 | 1,120 | 650 | ||||||||||||||||||
Equity commissions(2) | 794 | 667 | 204 | 196 | 205 | 189 | 173 | ||||||||||||||||||
Total | $ | 3,902 | $ | 3,729 | $ | 720 | $ | 996 | $ | 877 | $ | 1,309 | $ | 823 | |||||||||||
Trading-related Revenue by Product and Equity Commissions | |||||||||||||||||||||||||
Fixed income | $ | 1,054 | $ | 1,547 | $ | 160 | $ | 336 | $ | 107 | $ | 451 | $ | 283 | |||||||||||
Interest rate(1) | 767 | 667 | 177 | 176 | 185 | 229 | 95 | ||||||||||||||||||
Foreign exchange | 744 | 752 | 159 | 199 | 190 | 196 | 231 | ||||||||||||||||||
Equities | 407 | 195 | 32 | 167 | 60 | 148 | 75 | ||||||||||||||||||
Equity commissions(2) | 794 | 667 | 204 | 196 | 205 | 189 | 173 | ||||||||||||||||||
Commodities | 87 | 45 | 34 | (35 | ) | 67 | 21 | 33 | |||||||||||||||||
Total trading-related revenue and equity commissions | 3,853 | 3,873 | 766 | 1,039 | 814 | 1,234 | 890 | ||||||||||||||||||
Credit portfolio hedges(3) | 49 | (144 | ) | (46 | ) | (43 | ) | 63 | 75 | (67 | ) | ||||||||||||||
Total | $ | 3,902 | $ | 3,729 | $ | 720 | $ | 996 | $ | 877 | $ | 1,309 | $ | 823 | |||||||||||
Year Ended December 31 | Fourth 2005 | Third 2005 | Second 2005 | First 2005 | Fourth 2004 | ||||||||||||||||||||
2005 | 2004 | ||||||||||||||||||||||||
Investment Banking Income | |||||||||||||||||||||||||
Securities underwriting | $ | 787 | $ | 920 | $ | 204 | $ | 245 | $ | 181 | $ | 157 | $ | 209 | |||||||||||
Syndications | 528 | 521 | 187 | 104 | 125 | 112 | 140 | ||||||||||||||||||
Advisory services | 409 | 310 | 104 | 135 | 95 | 75 | 94 | ||||||||||||||||||
Other | 25 | 32 | 6 | 7 | 6 | 6 | 7 | ||||||||||||||||||
Total investment banking income | $ | 1,749 | $ | 1,783 | $ | 501 | $ | 491 | $ | 407 | $ | 350 | $ | 450 | |||||||||||
(1) | Fully taxable-equivalent basis |
(2) | Included in Investment and Brokerage Services in the Consolidated Statement of Income. |
(3) | Includes credit default swaps and related products used for credit risk management. |
Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
18
Bank of America Corporation
Global Capital Markets & Investment Banking Strategic Progress Continues
Source: Thomson Financial except Syndicated Loans and Leveraged Loans from Loan Pricing Corporation.
Significant US market share gains
Banc of America Securities increased market share in high yield, M&A, investment grade, public finance and common stock underwriting.
• | #1 in syndicated loans and leveraged loans, ranked by number of deals |
• | Investment grade rank rose to #5 from #8 in YTD 04 |
• | Top 5 rankings in: |
Syndicated loans
Leveraged loans
High yield
Investment Grade
19
Bank of America Corporation
Global Wealth and Investment Management Segment Results(1)
(Dollars in millions, except as noted)
Year Ended December 31 | Fourth 2005 | Third 2005 | Second 2005 | First 2005 | Fourth 2004 | |||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||||||
Net interest income(2) | $ | 3,770 | $ | 2,869 | $ | 993 | $ | 926 | $ | 910 | $ | 941 | $ | 834 | ||||||||||||||
Noninterest income | ||||||||||||||||||||||||||||
Investment & brokerage services | 3,122 | 2,728 | 788 | 788 | 783 | 763 | 767 | |||||||||||||||||||||
All other income | 501 | 336 | 148 | 120 | 143 | 90 | 80 | |||||||||||||||||||||
Total noninterest income | 3,623 | 3,064 | 936 | 908 | 926 | 853 | 847 | |||||||||||||||||||||
Total revenue(2) | 7,393 | 5,933 | 1,929 | 1,834 | 1,836 | 1,794 | 1,681 | |||||||||||||||||||||
Provision for credit losses | (5 | ) | (20 | ) | 1 | 1 | (9 | ) | 2 | (4 | ) | |||||||||||||||||
Noninterest expense | 3,672 | 3,431 | 939 | 914 | 919 | 900 | 929 | |||||||||||||||||||||
Income before income taxes | 3,726 | 2,522 | 989 | 919 | 926 | 892 | 756 | |||||||||||||||||||||
Income tax expense | 1,338 | 917 | 353 | 336 | 334 | 315 | 273 | |||||||||||||||||||||
Net income | $ | 2,388 | $ | 1,605 | $ | 636 | $ | 583 | $ | 592 | $ | 577 | $ | 483 | ||||||||||||||
Shareholder value added | $ | 1,337 | $ | 754 | $ | 353 | $ | 325 | $ | 330 | $ | 329 | $ | 228 | ||||||||||||||
Net interest yield(2) | 3.21 | % | 3.36 | % | 3.41 | % | 3.12 | % | 3.03 | % | 3.28 | % | 3.16 | % | ||||||||||||||
Return on average equity | 23.34 | 19.35 | 23.13 | 23.23 | 23.24 | 23.79 | 19.38 | |||||||||||||||||||||
Efficiency ratio(2) | 49.66 | 57.83 | 48.63 | 49.85 | 50.04 | 50.20 | 55.23 | |||||||||||||||||||||
Balance Sheet | ||||||||||||||||||||||||||||
Average | ||||||||||||||||||||||||||||
Total loans and leases | $ | 54,021 | $ | 44,057 | $ | 57,103 | $ | 55,175 | $ | 52,967 | $ | 50,759 | $ | 47,956 | ||||||||||||||
Total earning assets | 117,494 | 85,264 | 115,437 | 117,810 | 120,474 | 116,263 | 104,929 | |||||||||||||||||||||
Total assets | 125,289 | 91,889 | 123,205 | 125,687 | 128,401 | 123,867 | 112,682 | |||||||||||||||||||||
Total deposits | 115,301 | 83,053 | 112,809 | 116,068 | 118,234 | 114,098 | 102,489 | |||||||||||||||||||||
Common equity/Allocated Equity | 10,232 | 8,296 | 10,917 | 9,950 | 10,217 | 9,837 | 9,922 | |||||||||||||||||||||
Period End | ||||||||||||||||||||||||||||
Total loans and leases | 58,277 | 49,783 | 58,277 | 56,064 | 54,238 | 51,766 | 49,783 | |||||||||||||||||||||
Total assets | 127,156 | 122,587 | 127,156 | 123,578 | 127,466 | 127,830 | 122,587 | |||||||||||||||||||||
Total deposits | 113,389 | 111,107 | 113,389 | 114,301 | 116,831 | 117,561 | 111,107 | |||||||||||||||||||||
Client assets (in billions) | ||||||||||||||||||||||||||||
Assets under management | $ | 482.4 | $ | 451.5 | $ | 482.4 | $ | 457.4 | $ | 442.8 | $ | 433.4 | $ | 451.5 | ||||||||||||||
Client brokerage assets | 161.7 | 149.9 | 161.7 | 155.6 | 150.9 | 150.7 | 149.9 | |||||||||||||||||||||
Assets in custody | 94.2 | 107.0 | 94.2 | 96.1 | 101.7 | 100.8 | 107.0 | |||||||||||||||||||||
Total client assets | $ | 738.3 | $ | 708.4 | $ | 738.3 | $ | 709.1 | $ | 695.4 | $ | 684.9 | $ | 708.4 | ||||||||||||||
(1) | Global Wealth and Investment Management services clients through five major businesses: Premier Banking, Banc of America Investments, The Private Bank, Columbia Management Group and Other Services. |
(2) | Fully taxable-equivalent basis |
Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
20
Bank of America Corporation
All Other Results(1)
(Dollars in millions)
Year Ended December 31 | Fourth 2005 | Third 2005 | Second 2005 | First 2005 | Fourth 2004 | |||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||||||
Net interest income(2) | $ | 80 | $ | 139 | $ | (17 | ) | $ | 45 | $ | 25 | $ | 27 | $ | 1 | |||||||||||||
Noninterest income | ||||||||||||||||||||||||||||
Equity investment gains | 1,646 | 750 | 403 | 565 | 414 | 264 | 402 | |||||||||||||||||||||
All other income | (565 | ) | (679 | ) | (224 | ) | (219 | ) | 76 | (198 | ) | (196 | ) | |||||||||||||||
Total noninterest income | 1,081 | 71 | 179 | 346 | 490 | 66 | 206 | |||||||||||||||||||||
Total revenue(2) | 1,161 | 210 | 162 | 391 | 515 | 93 | 207 | |||||||||||||||||||||
Provision for credit losses | 41 | 343 | 2 | 42 | (22 | ) | 19 | (50 | ) | |||||||||||||||||||
Gains on sales of debt securities | 823 | 2,016 | (23 | ) | 13 | 204 | 629 | 100 | ||||||||||||||||||||
Noninterest expense | 729 | 847 | 98 | 275 | 148 | 208 | 489 | |||||||||||||||||||||
Income before income taxes | 1,214 | 1,036 | 39 | 87 | 593 | 495 | (132 | ) | ||||||||||||||||||||
Income tax expense (benefit) | 170 | 237 | (73 | ) | (37 | ) | 155 | 125 | (85 | ) | ||||||||||||||||||
Net income | $ | 1,044 | $ | 799 | $ | 112 | $ | 124 | $ | 438 | $ | 370 | $ | (47 | ) | |||||||||||||
Shareholder value added | $ | (401 | ) | $ | (266 | ) | $ | (198 | ) | $ | (304 | ) | $ | 86 | $ | 15 | $ | (227 | ) | |||||||||
Balance Sheet | ||||||||||||||||||||||||||||
Average | ||||||||||||||||||||||||||||
Total loans and leases | $ | 124,271 | $ | 120,824 | $ | 128,143 | $ | 122,380 | $ | 118,086 | $ | 128,501 | $ | 127,860 | ||||||||||||||
Total earning assets | 140,847 | 92,446 | 156,739 | 149,298 | 135,186 | 121,683 | 96,526 | |||||||||||||||||||||
Total assets | 180,702 | 130,053 | 197,031 | 189,535 | 175,848 | 159,884 | 136,611 | |||||||||||||||||||||
Total deposits | 19,163 | 17,033 | 14,665 | 15,203 | 22,428 | 24,507 | 18,803 | |||||||||||||||||||||
Period End | ||||||||||||||||||||||||||||
Total loans and leases | 131,114 | 128,462 | 131,114 | 129,869 | 121,213 | 129,771 | 128,462 | |||||||||||||||||||||
Total assets | 195,509 | 133,026 | 195,509 | 195,270 | 184,652 | 154,807 | 133,026 | |||||||||||||||||||||
Total deposits | 14,813 | 23,577 | 14,813 | 12,468 | 19,393 | 22,413 | 23,577 |
(1) | All Other consists primarily of Equity Investments, noninterest income and expense amounts associated with the Asset and Liability Management process (including gains on sales of debt securities), the residual impact of the allowance for credit losses processes and funds transfer pricing allocation methodologies, merger and restructuring charges, intersegment eliminations, and the results of certain consumer finance and commercial lending businesses that are being liquidated. |
(2) | Fully taxable-equivalent basis |
Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
21
Bank of America Corporation
Outstanding Loans and Leases
(Dollars in millions)
December 31 2005 | September 30 2005 | Increase (Decrease) from 9/30/05 | ||||||||
Residential mortgage | $ | 182,587 | $ | 177,317 | $ | 5,270 | ||||
Credit card | 58,548 | 56,079 | 2,469 | |||||||
Home equity lines | 62,098 | 59,337 | 2,761 | |||||||
Direct/Indirect consumer | 45,490 | 49,585 | (4,095 | ) | ||||||
Other consumer(1) | 6,725 | 6,639 | 86 | |||||||
Total consumer | 355,448 | 348,957 | 6,491 | |||||||
Commercial - domestic | 140,533 | 130,730 | 9,803 | |||||||
Commercial real estate(2) | 35,766 | 35,794 | (28 | ) | ||||||
Commercial lease financing | 20,705 | 20,284 | 421 | |||||||
Commercial - foreign | 21,330 | 18,838 | 2,492 | |||||||
Total commercial | 218,334 | 205,646 | 12,688 | |||||||
Total | $ | 573,782 | $ | 554,603 | $ | 19,179 | ||||
(1) | Includes consumer finance of $2,849 million and $2,988 million; foreign consumer of $3,841 million and $3,575 million; and consumer lease financing of $35 million and $76 million at December 31, 2005 and September 30, 2005. |
(2) | Includes domestic commercial real estate loans of $35,181 million and $35,116 million; and foreign commercial real estate loans of $585 million and $678 million at December 31, 2005 and September 30, 2005. |
22
Bank of America Corporation
Commercial Utilized Credit Exposure and Net Credit Default Protection by Industry(1)
(Dollars in millions)
Commercial Utilized Credit Exposure(1) | Net Credit Default Protection | |||||||||||||||||||||
December 31 2005 | September 30 2005 | Increase (Decrease) | December 31 2005 | September 30 2005 | (Increase) Decrease | |||||||||||||||||
Real estate(2) | $ | 41,665 | $ | 42,839 | $ | (1,174 | ) | $ | (788 | ) | $ | (843 | ) | $ | 55 | |||||||
Banks | 26,514 | 23,831 | 2,683 | 31 | (31 | ) | 62 | |||||||||||||||
Diversified financials | 25,859 | 23,488 | 2,371 | (543 | ) | (515 | ) | (28 | ) | |||||||||||||
Retailing | 23,913 | 25,046 | (1,133 | ) | (1,124 | ) | (1,112 | ) | (12 | ) | ||||||||||||
Education and government | 22,331 | 21,436 | 895 | — | — | — | ||||||||||||||||
Individuals and trusts | 17,237 | 17,230 | 7 | (30 | ) | — | (30 | ) | ||||||||||||||
Materials | 16,477 | 13,914 | 2,563 | (1,149 | ) | (1,005 | ) | (144 | ) | |||||||||||||
Consumer durables and apparel | 14,988 | 14,501 | 487 | (772 | ) | (852 | ) | 80 | ||||||||||||||
Capital goods | 13,640 | 12,750 | 890 | (751 | ) | (799 | ) | 48 | ||||||||||||||
Commercial services and supplies | 13,605 | 12,667 | 938 | (472 | ) | (295 | ) | (177 | ) | |||||||||||||
Transportation | 13,449 | 12,904 | 545 | (392 | ) | (266 | ) | (126 | ) | |||||||||||||
Healthcare equipment and services | 13,294 | 11,985 | 1,309 | (709 | ) | (979 | ) | 270 | ||||||||||||||
Leisure and sports, hotels and restaurants | 13,005 | 12,657 | 348 | (874 | ) | (987 | ) | 113 | ||||||||||||||
Food, beverage and tobacco | 11,578 | 11,150 | 428 | (621 | ) | (647 | ) | 26 | ||||||||||||||
Energy | 9,992 | 10,769 | (777 | ) | (559 | ) | (761 | ) | 202 | |||||||||||||
Media | 6,608 | 5,727 | 881 | (1,790 | ) | (1,609 | ) | (181 | ) | |||||||||||||
Religious and social organizations | 6,340 | 6,140 | 200 | — | — | — | ||||||||||||||||
Utilities | 4,858 | 5,362 | (504 | ) | (899 | ) | (877 | ) | (22 | ) | ||||||||||||
Insurance | 4,692 | 4,760 | (68 | ) | (1,453 | ) | (1,523 | ) | 70 | |||||||||||||
Food and staples retailing | 3,802 | 3,531 | 271 | (334 | ) | (361 | ) | 27 | ||||||||||||||
Technology hardware and equipment | 3,737 | 3,378 | 359 | (563 | ) | (500 | ) | (63 | ) | |||||||||||||
Telecommunication services | 3,461 | 3,486 | (25 | ) | (1,205 | ) | (1,227 | ) | 22 | |||||||||||||
Software and services | 2,668 | 2,483 | 185 | (299 | ) | (301 | ) | 2 | ||||||||||||||
Automobiles and components | 1,681 | 1,874 | (193 | ) | (679 | ) | (796 | ) | 117 | |||||||||||||
Pharmaceuticals and biotechnology | 1,647 | 1,384 | 263 | (470 | ) | (281 | ) | (189 | ) | |||||||||||||
Household and personal products | 379 | 457 | (78 | ) | 75 | 50 | 25 | |||||||||||||||
Other(3) | 2,587 | 2,864 | (277 | ) | 1,677 | (388 | ) | 2,065 | ||||||||||||||
Total | $ | 320,007 | $ | 308,613 | $ | 11,394 | $ | (14,693 | ) | $ | (16,905 | ) | $ | 2,212 | ||||||||
(1) | Includes loans and leases, standby letters of credit and financial guarantees, derivative assets, assets held for sale and commercial letters of credit. Derivativeassets are reported on a mark-to-market basis and have not been reduced by the amount of collateral applied. Derivative asset collateral totaled $17.1 billionand $17.8 billion at December 31, 2005 and September 30, 2005. |
(2) | 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 uponthe borrowers’ or counterparties’ primary business activity using operating cash flow and primary source of repayment as key factors. |
(3) | This category represents net CDS index positions. CDS indices include a number of names distributed across a variety of industries. As of December 31, 2005index positions were principally investment grade. |
Certain prior period amounts have been reclassified to conform to current period presentation.
23
Bank of America Corporation
Net Credit Default Protection by Credit Exposure Debt Rating
(Dollars in millions)
December 31, 2005 | September 30, 2005 | ||||||||||||
Ratings | Net Notional | Percent | Net Notional | Percent | |||||||||
AAA | $ | 22 | 0.2 | % | $ | 5 | — | % | |||||
AA | 523 | 3.6 | 638 | 3.8 | |||||||||
A | 4,861 | 33.1 | 4,947 | 29.2 | |||||||||
BBB | 8,572 | 58.2 | 8,412 | 49.8 | |||||||||
BB | 1,792 | 12.2 | 2,158 | 12.8 | |||||||||
B | 424 | 2.9 | 341 | 2.0 | |||||||||
CCC | 149 | 1.0 | 20 | 0.1 | |||||||||
CC | — | — | 31 | 0.2 | |||||||||
NR(1) | (1,650 | ) | (11.2 | ) | 353 | 2.1 | |||||||
Total | $ | 14,693 | 100.0 | % | $ | 16,905 | 100.0 | % | |||||
(1) | In addition to unrated names, “NR” includes $1,677 million in net CDS index positions. While index positions are principally investment grade, CDS indices include names in and across each of the ratings categories. |
Net Credit Default Protection by Maturity Profile
December 31 2005 | September 30 2005 | |||||
Less than or equal to one year | — | % | 2 | % | ||
Greater than one year and less than or equal to five years | 65 | 75 | ||||
Greater than five years | 35 | 23 | ||||
Total | 100 | % | 100 | % | ||
24
Bank of America Corporation
Nonperforming Assets
(Dollars in millions)
December 31 2005 | September 30 2005 | June 30 2005 | March 31 2005 | December 31 2004 | ||||||||||||||||
Residential mortgage | $ | 570 | $ | 493 | $ | 494 | $ | 536 | $ | 554 | ||||||||||
Home equity lines | 117 | 88 | 75 | 70 | 66 | |||||||||||||||
Direct/Indirect consumer | 37 | 32 | 33 | 32 | 33 | |||||||||||||||
Other consumer | 61 | 75 | 76 | 83 | 85 | |||||||||||||||
Total consumer | 785 | 688 | 678 | 721 | 738 | |||||||||||||||
Commercial - domestic | 581 | 641 | 662 | 811 | 855 | |||||||||||||||
Commercial real estate | 49 | 44 | 60 | 64 | 87 | |||||||||||||||
Commercial lease financing | 62 | 61 | 282 | 249 | 266 | |||||||||||||||
Commercial - foreign | 34 | 64 | 88 | 228 | 267 | |||||||||||||||
Total commercial | 726 | 810 | 1,092 | 1,352 | 1,475 | |||||||||||||||
Total nonperforming loans and leases | 1,511 | 1,498 | 1,770 | 2,073 | 2,213 | |||||||||||||||
Nonperforming securities(1) | — | — | 14 | 153 | 140 | |||||||||||||||
Foreclosed properties | 92 | 99 | 111 | 112 | 102 | |||||||||||||||
Total nonperforming assets(2) | $ | 1,603 | $ | 1,597 | $ | 1,895 | $ | 2,338 | $ | 2,455 | ||||||||||
Loans past due 90 days or more and still accruing | $ | 1,455 | $ | 1,417 | $ | 1,235 | $ | 1,211 | $ | 1,294 | ||||||||||
Nonperforming assets / Total assets | 0.12 | % | 0.13 | % | 0.15 | % | 0.19 | % | 0.22 | % | ||||||||||
Nonperforming assets / Total loans, leases and foreclosed properties | 0.28 | 0.29 | 0.36 | 0.44 | 0.47 | |||||||||||||||
Nonperforming loans and leases / Total loans and leases | 0.26 | 0.27 | 0.33 | 0.39 | 0.42 | |||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Allowance for loan and lease losses | $ | 8,045 | $ | 8,326 | $ | 8,319 | $ | 8,313 | $ | 8,626 | ||||||||||
Reserve for unfunded lending commitments | 395 | 390 | 383 | 394 | 402 | |||||||||||||||
Total | $ | 8,440 | $ | 8,716 | $ | 8,702 | $ | 8,707 | $ | 9,028 | ||||||||||
Allowance for loan and lease losses / Total loans and leases | 1.40 | % | 1.50 | % | 1.57 | % | 1.57 | % | 1.65 | % | ||||||||||
Allowance for loan and lease losses / Total nonperforming loans and leases | 532 | 556 | 470 | 401 | 390 | |||||||||||||||
Commercial criticized exposure | $ | 7,527 | $ | 7,632 | $ | 7,731 | $ | 8,858 | $ | 10,249 | ||||||||||
Commercial criticized exposure / Commercial utilized exposure | 2.35 | % | 2.47 | % | 2.59 | % | 2.95 | % | 3.44 | % |
Loans are classified as domestic or foreign based upon the domicile of the borrower.
(1) | The decline in nonperforming securities was primarily driven by an exchange of nonperforming securities for a combination of performing securities in Argentina that resulted from the completion of a government mandated securities exchange program. |
(2) | Balances do not include $50, $93, $49, $76 and $151 of nonperforming assets, primarily loans held-for-sale, included in Other Assets at December 31, 2005, September 30, 2005, June 30, 2005, March 31, 2005 and December 31, 2004, respectively. |
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
25
Bank of America Corporation
Quarterly Net Charge-offs and Net Charge-off Ratios
(Dollars in millions)
Fourth Quarter 2005 | Third Quarter 2005 | Second Quarter 2005 | First Quarter 2005 | Fourth Quarter 2004 | |||||||||||||||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||
Residential mortgage | $ | 5 | 0.01 | % | $ | 7 | 0.02 | % | $ | 11 | 0.03 | % | $ | 4 | 0.01 | % | $ | 6 | 0.01 | % | |||||||||||||||
Credit card | 1,366 | 9.53 | 772 | 5.55 | 774 | 5.91 | 740 | 5.85 | 691 | 5.57 | |||||||||||||||||||||||||
Home equity lines | 7 | 0.04 | 9 | 0.06 | 9 | 0.07 | 6 | 0.05 | 4 | 0.03 | |||||||||||||||||||||||||
Direct/Indirect consumer | 81 | 0.69 | 60 | 0.50 | 46 | 0.43 | 61 | 0.60 | 55 | 0.55 | |||||||||||||||||||||||||
Other consumer(1) | 118 | 7.06 | 58 | 3.42 | 43 | 2.48 | 56 | 3.12 | 45 | 2.39 | |||||||||||||||||||||||||
Total consumer | 1,577 | 1.79 | 906 | 1.06 | 883 | 1.09 | 867 | 1.07 | 801 | 0.98 | |||||||||||||||||||||||||
Commercial - domestic | 97 | 0.28 | 54 | 0.17 | (7 | ) | (0.02 | ) | 26 | 0.09 | 27 | 0.09 | |||||||||||||||||||||||
Commercial real estate | (3 | ) | (0.03 | ) | 2 | 0.02 | 1 | 0.01 | — | — | 1 | 0.02 | |||||||||||||||||||||||
Commercial lease financing | (12 | ) | (0.25 | ) | 209 | 4.06 | 9 | 0.19 | 25 | 0.48 | 11 | 0.21 | |||||||||||||||||||||||
Commercial - foreign | (11 | ) | (0.21 | ) | (26 | ) | (0.55 | ) | (6 | ) | (0.15 | ) | (29 | ) | (0.66 | ) | 5 | 0.09 | |||||||||||||||||
Total commercial | 71 | 0.13 | 239 | 0.47 | (3 | ) | (0.01 | ) | 22 | 0.05 | 44 | 0.09 | |||||||||||||||||||||||
Total net charge-offs | $ | 1,648 | 1.16 | $ | 1,145 | 0.84 | $ | 880 | 0.68 | �� | $ | 889 | 0.69 | $ | 845 | 0.65 | |||||||||||||||||||
By Business Segment: | |||||||||||||||||||||||||||||||||||
Global Consumer and Small Business Banking | $ | 1,535 | 4.08 | % | $ | 887 | 2.42 | % | $ | 861 | 2.44 | % | $ | 817 | 2.38 | % | $ | 756 | 2.18 | % | |||||||||||||||
Global Business and Financial Services | 114 | 0.24 | 292 | 0.63 | (8 | ) | (0.02 | ) | 82 | 0.19 | 72 | 0.17 | |||||||||||||||||||||||
Global Capital Markets and Investment Banking | (27 | ) | (0.29 | ) | (52 | ) | (0.63 | ) | 3 | 0.04 | (43 | ) | (0.50 | ) | (25 | ) | (0.29 | ) | |||||||||||||||||
Global Wealth and Investment Management | (1 | ) | (0.01 | ) | (1 | ) | (0.01 | ) | 5 | 0.04 | — | — | 3 | 0.03 | |||||||||||||||||||||
All Other | 27 | 0.09 | 19 | 0.06 | 19 | 0.07 | 33 | 0.10 | 39 | 0.12 | |||||||||||||||||||||||||
Total net charge-offs | $ | 1,648 | 1.16 | $ | 1,145 | 0.84 | $ | 880 | 0.68 | $ | 889 | 0.69 | $ | 845 | 0.65 | ||||||||||||||||||||
Loans are classified as domestic or foreign based upon the domicile of the borrower.
(1) | Includes lease financing of $2 million, $2 million, $2 million, $3 million and $5 million for the quarters ended December 31, 2005, September 30, 2005, June 30, 2005, March 31, 2005 and December 31, 2004, respectively. |
26
Bank of America Corporation
Year-to-Date Net Charge-offs and Net Charge-off Ratios
(Dollars in millions)
Year Ended December 31 | ||||||||||||||
2005 | 2004 | |||||||||||||
Amount | Percent | Amount | Percent | |||||||||||
Residential mortgage | $ | 27 | 0.02 | % | $ | 36 | 0.02 | % | ||||||
Credit card | 3,652 | 6.76 | 2,305 | 5.31 | ||||||||||
Home equity lines | 31 | 0.05 | 15 | 0.04 | ||||||||||
Direct/Indirect consumer | 248 | 0.55 | 208 | 0.55 | ||||||||||
Other consumer(1) | 275 | 3.99 | 193 | 2.51 | ||||||||||
Total consumer | 4,233 | 1.26 | 2,757 | 0.93 | ||||||||||
Commercial - domestic | 170 | 0.13 | 177 | 0.15 | ||||||||||
Commercial real estate | — | — | (3 | ) | (0.01 | ) | ||||||||
Commercial lease financing | 231 | 1.13 | 9 | 0.05 | ||||||||||
Commercial - foreign | (72 | ) | (0.39 | ) | 173 | 1.05 | ||||||||
Total commercial | 329 | 0.16 | 356 | 0.20 | ||||||||||
Total net charge-offs | $ | 4,562 | 0.85 | $ | 3,113 | 0.66 | ||||||||
By Business Segment: | ||||||||||||||
Global Consumer and Small Business Banking | $ | 4,100 | 2.85 | % | $ | 2,541 | 2.08 | % | ||||||
Global Business and Financial Services | 480 | 0.27 | 266 | 0.18 | ||||||||||
Global Capital Markets and Investment Banking | (119 | ) | (0.35 | ) | 126 | 0.37 | ||||||||
Global Wealth and Investment Management | 3 | 0.01 | 6 | 0.01 | ||||||||||
All Other | 98 | 0.08 | 174 | 0.14 | ||||||||||
Total net charge-offs | $ | 4,562 | 0.85 | $ | 3,113 | 0.66 | ||||||||
Loans are classified as domestic or foreign based upon the domicile of the borrower.
(1) | Includes lease financing of $9 million and $27 million for the year ended December 31, 2005 and 2004. |
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
27
Bank of America Corporation
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 Foreign Exposure December 31, 2005 | Increase/ (Decrease) from December 31, 2004 | |||||||||||||||||
Region/Country | |||||||||||||||||||||||||
Asia Pacific | |||||||||||||||||||||||||
China(7) | $ | 172 | $ | 91 | $ | 110 | $ | 3,031 | $ | 3,404 | $ | 0 | $ | 3,404 | $ | 3,296 | |||||||||
India | 547 | 176 | 341 | 482 | 1,546 | 45 | 1,591 | 99 | |||||||||||||||||
South Korea | 267 | 474 | 52 | 305 | 1,098 | 57 | 1,155 | (228 | ) | ||||||||||||||||
Taiwan | 266 | 77 | 84 | 48 | 475 | 448 | 923 | (404 | ) | ||||||||||||||||
Hong Kong | 216 | 76 | 99 | 216 | 607 | 0 | 607 | (512 | ) | ||||||||||||||||
Singapore | 209 | 7 | 45 | 209 | 470 | 0 | 470 | 130 | |||||||||||||||||
Other Asia Pacific(8) | 46 | 88 | 43 | 248 | 425 | 170 | 595 | 49 | |||||||||||||||||
Total Asia Pacific | 1,723 | 989 | 774 | 4,539 | 8,025 | 720 | 8,745 | 2,430 | |||||||||||||||||
Latin America | |||||||||||||||||||||||||
Brazil(9) | 1,008 | 187 | 0 | 44 | 1,239 | 2,232 | 3,471 | (79 | ) | ||||||||||||||||
Mexico | 821 | 176 | 58 | 2,271 | 3,326 | 0 | 3,326 | 460 | |||||||||||||||||
Chile | 236 | 19 | 0 | 8 | 263 | 717 | 980 | (200 | ) | ||||||||||||||||
Argentina | 68 | 24 | 0 | 102 | 194 | 0 | 194 | (197 | ) | ||||||||||||||||
Other Latin America(8) | 126 | 134 | 7 | 84 | 351 | 8 | 359 | (716 | ) | ||||||||||||||||
Total Latin America | 2,259 | 540 | 65 | 2,509 | 5,373 | 2,957 | 8,330 | (732 | ) | ||||||||||||||||
Central and Eastern Europe(8) | 26 | 42 | 9 | 65 | 142 | 0 | 142 | (99 | ) | ||||||||||||||||
Total | $ | 4,008 | $ | 1,571 | $ | 848 | $ | 7,113 | $ | 13,540 | $ | 3,677 | $ | 17,217 | $ | 1,599 | |||||||||
(1) | There is no generally accepted definition of emerging markets. The definition that we use includes all countries in Latin America excluding Cayman Islands and Bermuda; all countries in Asia Pacific excluding Japan, Australia and New Zealand; and all countries in Central and Eastern Europe excluding Greece. |
(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 not been reduced by the amount of collateral applied. Derivative asset collateral totaled $58 million and and $361 million at December 31, 2005 and 2004. |
(4) | Generally, cross-border resale agreements are presented based on the domicile of the counterparty because the counterparty has the legal obligation for repayment except where the underlying securities are U.S. Treasuries, in which case the domicile is in the U.S., and therefore, excluded from this presentation. For regulatory reporting under Federal Financial Institutions Examination Council (FFIEC) guidelines, cross-border resale agreements are presented based on the domicile of the issuer of the securities that are held as collateral. |
(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. Management subtracts local funding or liabilities from local exposures as allowed by the FFIEC. Total amount of available local liabilities funding local country exposure at December 31, 2005 was $24.2 billion compared to $17.2 billion at December 31, 2004. Local liabilities at December 31, 2005 in Asia Pacific and Latin America was $13.6 billion and $10.6 billion, of which $8.4 billion was in Hong Kong, $5.3 billion in Brazil, $3.1 billion in Singapore, $1.7 billion in Argentina, $1.6 billion in Chile, $1.2 billion in Mexico, $782 million in India and $718 million in Uruguay. There were no other countries with available local liabilities funding local country exposure greater than $500 million. |
(7) | Securities/Other Investments includes equity investment of $3.0 billion in China Construction Bank (CCB). |
(8) | Other Asia Pacific, Other Latin America and Central and Eastern Europe include countries each with total foreign exposure of less than $300 million. |
(9) | The Corporation has risk mitigation instruments associated with certain exposures for Brazil, including structured trade related transfer risk mitigation of $830 millionand $950 million, third party funding of $313 million and $286 million, and linked certificates of deposit of $59 million and $125 million at December 31, 2005 and 2004. The resulting total foreign exposure net of risk mitigation was $2.3 billion and $2.2 billion at December 31, 2005 and 2004. |
Information for periods after April 1, 2004 includes the FleetBoston acquisition; prior periods have not been restated.
28
Bank of America/FleetBoston
Pro Forma Combined Statement of Income
Total Corporation
The following pro forma combined financial information and explanatory notes present how the combined financial statements of Bank of America and FleetBoston may have appeared had the businesses actually been combined at the beginning of the period presented. The pro forma combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined companies had the companies actually been combined at the beginning of the period presented and had the impact of possible revenue enhancements, expense efficiencies, hedging activities, asset dispositions, and share repurchases, among other factors, been considered.
For the Year Ended December 31, 2004 | |||||||||||||||
(Dollars in millions, except per share information) | Bank of America Post Merger | FleetBoston Premerger | Pro Forma Adjustments | Combined | |||||||||||
Net interest income | $ | 28,794 | $ | 1,705 | $ | 82 | (A) (B) (C) (D) (E) | $ | 30,581 | ||||||
Noninterest income | |||||||||||||||
Service charges | 6,989 | 385 | (38 | ) | (F) | 7,336 | |||||||||
Investment and brokerage services | 3,614 | 413 | 4,027 | ||||||||||||
Mortgage banking income | 414 | 6 | 420 | ||||||||||||
Investment banking income | 1,886 | 33 | 1,919 | ||||||||||||
Equity investment gains | 863 | 86 | 949 | ||||||||||||
Card income | 4,592 | 152 | 148 | (C) (F) (G) | 4,892 | ||||||||||
Trading account profits | 869 | 49 | 918 | ||||||||||||
Other income | 858 | 284 | — | 1,142 | |||||||||||
Total noninterest income | 20,085 | 1,408 | 110 | 21,603 | |||||||||||
Total revenue | 48,879 | 3,113 | 192 | 52,184 | |||||||||||
Provision for credit losses | 2,769 | — | — | 2,769 | |||||||||||
Gains on sales of securities | 2,123 | 49 | — | 2,172 | |||||||||||
Noninterest expense | |||||||||||||||
Personnel | 13,435 | 899 | (5 | ) | (H) | 14,329 | |||||||||
Occupancy | 2,379 | 136 | (14 | ) | (I) | 2,501 | |||||||||
Equipment | 1,214 | 101 | (5 | ) | (I) | 1,310 | |||||||||
Marketing | 1,349 | 95 | 53 | (G) | 1,497 | ||||||||||
Professional Fees | 836 | 89 | 925 | ||||||||||||
Amortization of intangibles | 664 | 21 | 120 | (J) | 805 | ||||||||||
Data Processing | 1,330 | 103 | 1,433 | ||||||||||||
Telecommunications | 730 | 21 | 751 | ||||||||||||
Other general operating (including indirect expenses) | 4,457 | 499 | — | 4,956 | |||||||||||
Merger and restructuring charges | 618 | — | 618 | ||||||||||||
Total noninterest expense | 27,012 | 1,964 | 149 | 29,125 | |||||||||||
Income before income taxes | 21,221 | 1,198 | 43 | 22,462 | |||||||||||
Income tax expense | 7,078 | 425 | 56 | (K) | 7,559 | ||||||||||
Net income | 14,143 | 773 | (13 | ) | 14,903 | ||||||||||
Net income available to common shareholders | 14,127 | 768 | (13 | ) | 14,882 | ||||||||||
Earnings per share | 3.76 | 0.72 | 3.67 | ||||||||||||
Diluted earnings per share | 3.69 | 0.71 | 3.61 | ||||||||||||
Merger and restructuring charges, net of tax | 411 | — | — | 411 | |||||||||||
Operating net income | 14,554 | 773 | (13 | ) | 15,314 | ||||||||||
Operating net income available to common shareholders | 14,538 | 768 | (13 | ) | 15,293 | ||||||||||
Operating diluted earnings per share | 3.80 | 0.71 | 3.71 | ||||||||||||
Impact of merger and restructuring charges | $ | 0.11 | $ | — | $ | (0.01 | ) | $ | 0.10 | ||||||
Average common shares issued and outstanding (in thousands) | 3,758,507 | 1,071,104 | (775,289 | ) | (L) | 4,054,322 | |||||||||
Average diluted common shares issued and outstanding (in thousands) | 3,823,943 | 1,086,636 | (785,908 | ) | (L) | 4,124,671 | |||||||||
Certain prior period amounts have been reclassified to conform with current period presentation.
29
Bank of America/FleetBoston
Pro Forma Combined Statement of Income
Global Consumer and Small Business
The following pro forma combined financial information and explanatory notes present how the combined financial statements of Bank of America and FleetBoston may have appeared had the businesses actually been combined at the beginning of the period presented. The pro forma combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined companies had the companies actually been combined at the beginning of the period presented and had the impact of possible revenue enhancements, expense efficiencies, hedging activities, asset dispositions, and share repurchases, among other factors, been considered.
For the Year Ended December 31, 2004 | |||||||||||||||||
(Dollars in millions) | Bank of America Post Merger | FleetBoston Premerger | Pro Forma Adjustments | (M) | Combined | ||||||||||||
Net interest income | $ | 15,911 | $ | 967 | $ | (10 | ) | $ | 16,868 | ||||||||
Noninterest income | |||||||||||||||||
Service charges | 4,329 | 191 | (38 | ) | 4,482 | ||||||||||||
Investment and brokerage services | — | — | — | ||||||||||||||
Mortgage banking income | 589 | 6 | 595 | ||||||||||||||
Investment banking income | — | — | — | ||||||||||||||
Equity investment gains | — | — | — | ||||||||||||||
Card income | 4,359 | 120 | 148 | 4,627 | |||||||||||||
Trading account profits | (361 | ) | 6 | (355 | ) | ||||||||||||
Other income | 329 | 20 | — | 349 | |||||||||||||
Total noninterest income | 9,245 | 343 | 110 | 9,698 | |||||||||||||
Total revenue | 25,156 | 1,310 | 100 | 26,566 | |||||||||||||
Provision for credit losses | 3,333 | 143 | 3,476 | ||||||||||||||
Gains on sales of securities | 117 | — | 117 | ||||||||||||||
Noninterest expense | |||||||||||||||||
Personnel | 3,181 | 197 | 3,378 | ||||||||||||||
Occupancy | 1,165 | 74 | (1 | ) | 1,238 | ||||||||||||
Equipment | 205 | 13 | 218 | ||||||||||||||
Marketing | 1,061 | 57 | 55 | 1,173 | |||||||||||||
Professional Fees | 76 | 6 | 82 | ||||||||||||||
Amortization of intangibles | 441 | 15 | 80 | 536 | |||||||||||||
Data Processing | 360 | 14 | 374 | ||||||||||||||
Telecommunications | 199 | 3 | 202 | ||||||||||||||
Other general operating (including indirect expenses) | 5,867 | 250 | (1 | ) | 6,116 | ||||||||||||
Merger and restructuring charges | — | — | — | ||||||||||||||
Total noninterest expense | 12,555 | 629 | 133 | 13,317 | |||||||||||||
Income before income taxes | 9,385 | 538 | (33 | ) | 9,890 | ||||||||||||
Income tax expense | 3,414 | 242 | (43 | ) | 3,613 | ||||||||||||
Net Income | $ | 5,971 | $ | 296 | $ | 10 | $ | 6,277 | |||||||||
Certain prior period amounts have been reclassified to conform with current period presentation.
30
Bank of America/FleetBoston
Pro Forma Combined Statement of Income
Global Business and Financial Services
The following pro forma combined financial information and explanatory notes present how the combined financial statements of Bank of America and FleetBoston may have appeared had the businesses actually been combined at the beginning of the period presented. The pro forma combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined companies had the companies actually been combined at the beginning of the period presented and had the impact of possible revenue enhancements, expense efficiencies, hedging activities, asset dispositions, and share repurchases, among other factors, been considered.
For the Year Ended December 31, 2004 | |||||||||||||||||
(Dollars in millions) | Bank of America Post Merger | FleetBoston Premerger | Pro Forma Adjustments | (M) | Combined | ||||||||||||
Net interest income | $ | 6,534 | $ | 549 | $ | 30 | $ | 7,113 | |||||||||
Noninterest income | |||||||||||||||||
Service charges | 1,287 | 118 | 1,405 | ||||||||||||||
Investment and brokerage services | 168 | 36 | 204 | ||||||||||||||
Mortgage banking income | 7 | 4 | 11 | ||||||||||||||
Investment banking income | 132 | 19 | 151 | ||||||||||||||
Equity investment gains | 52 | 2 | 54 | ||||||||||||||
Card income | 82 | 9 | 91 | ||||||||||||||
Trading account profits | 128 | 36 | 164 | ||||||||||||||
Other income | 861 | 187 | — | 1,048 | |||||||||||||
Total noninterest income | 2,717 | 411 | — | 3,128 | |||||||||||||
Total revenue | 9,251 | 960 | 30 | 10,241 | |||||||||||||
Provision for credit losses | (442 | ) | 81 | (361 | ) | ||||||||||||
Gains on sales of securities | — | — | — | ||||||||||||||
Noninterest expense | |||||||||||||||||
Personnel | 1,517 | 236 | 1,753 | ||||||||||||||
Occupancy | 217 | 28 | (3 | ) | 242 | ||||||||||||
Equipment | 46 | 14 | (1 | ) | 59 | ||||||||||||
Marketing | 62 | 8 | 70 | ||||||||||||||
Professional Fees | 69 | 13 | 82 | ||||||||||||||
Amortization of intangibles | 113 | 3 | 21 | 137 | |||||||||||||
Data Processing | 65 | 18 | 83 | ||||||||||||||
Telecommunications | 45 | 6 | 51 | ||||||||||||||
Other general operating (including indirect expenses) | 1,464 | 211 | 5 | 1,680 | |||||||||||||
Merger and restructuring charges | — | — | — | ||||||||||||||
Total noninterest expense | 3,598 | 537 | 22 | 4,157 | |||||||||||||
Income before income taxes | 6,095 | 342 | 8 | 6,445 | |||||||||||||
Income tax expense | 2,251 | 109 | 10 | 2,370 | |||||||||||||
Net Income | $ | 3,844 | $ | 233 | $ | (2 | ) | $ | 4,075 | ||||||||
Certain prior period amounts have been reclassified to conform with current period presentation.
31
Bank of America/FleetBoston
Pro Forma Combined Statement of Income
Global Capital Markets and Investment Banking
The following pro forma combined financial information and explanatory notes present how the combined financial statements of Bank of America and FleetBoston may have appeared had the businesses actually been combined at the beginning of the period presented. The pro forma combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined companies had the companies actually been combined at the beginning of the period presented and had the impact of possible revenue enhancements, expense efficiencies, hedging activities, asset dispositions, and share repurchases, among other factors, been considered.
For the Year Ended December 31, 2004 | |||||||||||||||||
(Dollars in millions) | Bank of America Post Merger | FleetBoston Premerger | Pro Forma Adjustments | (M) | Combined | ||||||||||||
Net interest income | $ | 4,058 | $ | 161 | $ | (9 | ) | $ | 4,210 | ||||||||
Noninterest income | |||||||||||||||||
Service charges | 1,287 | 56 | 1,343 | ||||||||||||||
Investment and brokerage services | 705 | 15 | 720 | ||||||||||||||
Mortgage banking income | 7 | 2 | 9 | ||||||||||||||
Investment banking income | 1,783 | 7 | 1,790 | ||||||||||||||
Equity investment gains | 58 | — | 58 | ||||||||||||||
Card income | 151 | — | 151 | ||||||||||||||
Trading account profits | 1,023 | 26 | 1,049 | ||||||||||||||
Other income | (26 | ) | 50 | — | 24 | ||||||||||||
Total noninterest income | 4,988 | 156 | — | 5,144 | |||||||||||||
Total revenue | 9,046 | 317 | (9 | ) | 9,354 | ||||||||||||
Provision for credit losses | (445 | ) | 15 | (430 | ) | ||||||||||||
Gains on sales of securities | (10 | ) | — | (10 | ) | ||||||||||||
Noninterest expense | |||||||||||||||||
Personnel | 2,356 | 39 | 2,395 | ||||||||||||||
Occupancy | 254 | 5 | 259 | ||||||||||||||
Equipment | 33 | — | 33 | ||||||||||||||
Marketing | 52 | — | 52 | ||||||||||||||
Professional Fees | 213 | 1 | 214 | ||||||||||||||
Amortization of intangibles | 43 | 2 | 4 | 49 | |||||||||||||
Data Processing | 67 | 2 | 69 | ||||||||||||||
Telecommunications | 43 | — | 43 | ||||||||||||||
Other general operating (including indirect expense allocations) | 3,520 | 81 | (1 | ) | 3,600 | ||||||||||||
Merger and restructuring charges | — | — | — | ||||||||||||||
Total noninterest expense | 6,581 | 130 | 3 | 6,714 | |||||||||||||
Income before income taxes | 2,900 | 172 | (12 | ) | 3,060 | ||||||||||||
Income tax expense | 976 | 81 | (16 | ) | 1,041 | ||||||||||||
Net Income | $ | 1,924 | $ | 91 | $ | 4 | $ | 2,019 | |||||||||
Certain prior period amounts have been reclassified to conform with current period presentation.
32
Bank of America/FleetBoston
Pro Forma Combined Statement of Income
Global Wealth and Investment Management
The following pro forma combined financial information and explanatory notes present how the combined financial statements of Bank of America and FleetBoston may have appeared had the businesses actually been combined at the beginning of the period presented. The pro forma combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined companies had the companies actually been combined at the beginning of the period presented and had the impact of possible revenue enhancements, expense efficiencies, hedging activities, asset dispositions, and share repurchases, among other factors, been considered.
For the Year Ended December 31, 2004 | ||||||||||||||||||
(Dollars in millions) | Bank of America Post Merger | FleetBoston Premerger | Pro Forma Adjustments | (M) | Combined | |||||||||||||
Net interest income | $ | 2,869 | $ | 83 | $ | — | $ | 2,952 | ||||||||||
Noninterest income | ||||||||||||||||||
Service charges | 82 | 1 | 83 | |||||||||||||||
Investment and brokerage services | 2,728 | 379 | 3,107 | |||||||||||||||
Mortgage banking income | 58 | — | 58 | |||||||||||||||
Investment banking income | 19 | 3 | 22 | |||||||||||||||
Equity investment gains | 3 | 3 | 6 | |||||||||||||||
Card income | — | — | — | |||||||||||||||
Trading account profits | 86 | 41 | 127 | |||||||||||||||
Other income | 88 | 15 | — | 103 | ||||||||||||||
Total noninterest income | 3,064 | 442 | — | 3,506 | ||||||||||||||
Total revenue | 5,933 | 525 | — | 6,458 | ||||||||||||||
Provision for credit losses | (20 | ) | 2 | (18 | ) | |||||||||||||
Gains on sales of securities | — | — | — | |||||||||||||||
Noninterest expense | ||||||||||||||||||
Personnel | 1,422 | 165 | 1,587 | |||||||||||||||
Occupancy | 155 | 17 | (1 | ) | 171 | |||||||||||||
Equipment | 21 | 3 | 24 | |||||||||||||||
Marketing | 41 | 5 | 46 | |||||||||||||||
Professional Fees | 151 | 13 | 164 | |||||||||||||||
Amortization of intangibles | 62 | (1 | ) | 14 | 75 | |||||||||||||
Data Processing | 56 | 13 | 69 | |||||||||||||||
Telecommunications | 30 | 2 | 32 | |||||||||||||||
Other general operating (including indirect expenses) | 1,493 | 332 | (1 | ) | 1,824 | |||||||||||||
Merger and restructuring charges | — | — | — | |||||||||||||||
Total noninterest expense | 3,431 | 549 | 12 | 3,992 | ||||||||||||||
Income before income taxes | 2,522 | (26 | ) | (12 | ) | 2,484 | ||||||||||||
Income tax expense | 917 | 37 | (16 | ) | 938 | |||||||||||||
Net Income | $ | 1,605 | $ | (63 | ) | $ | 4 | $ | 1,546 | |||||||||
Certain prior period amounts have been reclassified to conform with current period presentation.
33
Bank of America/FleetBoston
Pro Forma Combined Statement of Income
All Other
The following pro forma combined financial information and explanatory notes present how the combined financial statements of Bank of America and FleetBoston may have appeared had the businesses actually been combined at the beginning of the period presented. The pro forma combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined companies had the companies actually been combined at the beginning of the period presented and had the impact of possible revenue enhancements, expense efficiencies, hedging activities, asset dispositions, and share repurchases, among other factors, been considered.
For the Year Ended December 31, 2004 | ||||||||||||||||||
(Dollars in millions) | Bank of America Post Merger | FleetBoston Premerger | Pro Forma Adjustments | (M) | Combined | |||||||||||||
Net interest income (Includes FTE offset) | $ | (578 | ) | $ | (55 | ) | $ | 71 | $ | (562 | ) | |||||||
Noninterest income | ||||||||||||||||||
Service charges | 4 | 19 | — | 23 | ||||||||||||||
Investment and brokerage services | 13 | (17 | ) | — | (4 | ) | ||||||||||||
Mortgage banking income | (247 | ) | (6 | ) | — | (253 | ) | |||||||||||
Investment banking income | (48 | ) | 4 | — | (44 | ) | ||||||||||||
Equity investment gains | 750 | 81 | — | 831 | ||||||||||||||
Card income | — | 23 | — | 23 | ||||||||||||||
Trading account profits | (7 | ) | (60 | ) | — | (67 | ) | |||||||||||
Other income | (394 | ) | 12 | — | (382 | ) | ||||||||||||
Total noninterest income | 71 | 56 | — | 127 | ||||||||||||||
Total revenue | (507 | ) | 1 | 71 | (435 | ) | ||||||||||||
Provision for credit losses | 343 | (241 | ) | — | 102 | |||||||||||||
Gains on sales of securities | 2,016 | 49 | — | 2,065 | ||||||||||||||
Noninterest expense | ||||||||||||||||||
Personnel | 4,959 | 262 | (5 | ) | 5,216 | |||||||||||||
Occupancy | 588 | 12 | (9 | ) | 591 | |||||||||||||
Equipment | 909 | 71 | (4 | ) | 976 | |||||||||||||
Marketing | 133 | 25 | (2 | ) | 156 | |||||||||||||
Professional Fees | 327 | 56 | — | 383 | ||||||||||||||
Amortization of intangibles | 5 | 2 | 1 | 8 | ||||||||||||||
Data Processing | 782 | 56 | — | 838 | ||||||||||||||
Telecommunications | 413 | 10 | — | 423 | ||||||||||||||
Other general operating (including indirect expenses) | (7,887 | ) | (375 | ) | (2 | ) | (8,264 | ) | ||||||||||
Merger and restructuring charges | 618 | — | — | 618 | ||||||||||||||
Total noninterest expense | 847 | 119 | (21 | ) | 945 | |||||||||||||
Income before income taxes | 319 | 172 | 92 | 583 | ||||||||||||||
Income tax expense (includes FTE offset) | (480 | ) | (44 | ) | 121 | (403 | ) | |||||||||||
Net Income | $ | 799 | $ | 216 | $ | (29 | ) | $ | 986 | |||||||||
Certain prior | period amounts have been reclassified to conform with current period presentation. |
34
The pro forma adjustments included in the unaudited pro forma condensed combined financial information are as follows:
(A) | An adjustment of $770 million to decrease the book value of the loan and lease portfolio to fair value was recorded. The adjustment will be recognized over the estimated remaining life of the loan and lease portfolio. The impact of the adjustment was to increase Interest Income by approximately $40 million for the year ended December 31, 2004. |
(B) | An adjustment of $84 million to decrease the book value of the securities portfolio to fair value was recorded. Certain unrealized gains currently reflected in other comprehensive income by FleetBoston will be accounted for as a premium paid by Bank of America and will be recognized over the remaining life of the securities portfolio. The impact of the amortization of the premium/ discount was to increase Interest Income by approximately $11 million for the year ended December 31, 2004. |
(C) | An adjustment of $54 million to reclassify FleetBoston’s credit card late fee revenue from Other Interest Income to Card Income to conform with Bank of America’s classification. |
(D) | An adjustment of $313 million to increase the book value of fixed-rate deposit liabilities to fair value was recorded. The adjustment will be recognized over the estimated remaining term of the related deposit liabilities. The impact of the adjustment was to decrease Interest Expense by approximately $20 million for the year ended December 31, 2004. |
(E) | An adjustment of $1.182 billion to increase the book value of outstanding long-term debt instruments to fair value was recorded. The adjustment will be recognized over the remaining life of the long-term debt instruments. The impact of the fair value adjustment was to decrease Interest Expense by approximately $66 million for the year ended December 31, 2004. |
(F) | Adjustment to reclassify FleetBoston’s debit card revenue from Service Charges to Card Income to conform with Bank of America’s classification. |
(G) | Adjustment to reclassify FleetBoston’s credit card marketing expense from Card Income to Marketing Expense to conform with Bank of America’s classification. The impact of this reclassification was to increase both Card Income and Marketing Expense by approximately $53 million for the year ended December 31, 2004. |
(H) | Adjustment of fixed-rate deferred compensation plans to current interest rates. |
(I) | An adjustment of $738 million to decrease the book value of owned real estate, leased property and related improvements, signage and computer equipment to fair value was recorded. The effect of these adjustments was to reduce occupancy costs by $14 million and equipment costs by $5 million for the year ended December 31, 2004. |
(J) | For purchase accounting a core deposit intangible of $2.174 billion, a purchased credit card relationship intangible of $660 million and other customer relationship intangibles of $409 million were recorded. These intangibles will be amortized over a period not to exceed ten years, on an accelerated basis for the core deposit intangible and purchased credit card relationship intangible and a straight-line basis for the other customer relationship intangibles. The value of the intangibles represents the estimated future economic benefit resulting from the acquired customer balances and relationships. This value was estimated by considering cash flows from the current balances of accounts, expected growth or attrition in balances, and the estimated life of the relationship. The impact of these adjustments was to increase Amortization of Intangibles $120 million for the year ended December 31, 2004. |
(K) | Adjustment to record the tax effect of the pro forma adjustments using Bank of America’s statutory tax rate of 36.9 percent. The increase in the effective tax rate from the statutory rate of 36.9 percent reflects the effect of the accounting for leverage leases in accordance with Financial Accounting Standards Board Interpretation No. 21 “Accounting for Leases in a Business Combination.” |
(L) | Weighted average shares were calculated using the historical weighted average shares outstanding for Bank of America and FleetBoston, adjusted using the exchange ratio to obtain the equivalent shares of Bank of America common stock for the year ended December 31, 2004. Both the historical weighted average shares outstanding of Bank of America and the exchange ratio have been adjusted to reflect the stock split. Earnings per share data has been computed based on the combined historical income of Bank of America, income from continuing operations for FleetBoston and the impact of pro forma purchase accounting adjustments. |
(M) | Reflects purchase accounting adjustments which were allocated to the business segments and All Other primarily based on how the assets acquired and liabilities assumed in the FleetBoston acquisition were allocated to the respective business segments. |
35
Bank of America/FleetBoston
Additional Pro Forma Calculations
For the Year Ended December 31, 2004
(Dollars in millions) | Bank of America Postmerger | FleetBoston Premerger | Pro Forma Adjustments | Combined | |||||||||
Average Managed Credit Card Balance Outstanding | |||||||||||||
Average Managed Credit Card Balance Outstanding | $ | 50,296 | $ | 4,144 | $ | — | $ | 54,440 | |||||
Card Services - Managed | |||||||||||||
Total revenue | 8,140 | 673 | 54 | (A) | 8,867 | ||||||||
Income before taxes | 2,332 | 249 | (23 | ) | 2,558 | ||||||||
Net income | 1,492 | 159 | 8 | (A) | 1,659 | ||||||||
Card Services - Held | |||||||||||||
Total revenue | 7,526 | 441 | 54 | (A) | 8,021 | ||||||||
Income before taxes | 2,242 | 190 | (23 | ) | 2,409 | ||||||||
Net income | 1,435 | 122 | 6 | (A) | 1,563 | ||||||||
Consumer and Small Business Banking Excluding Card Services - Held | |||||||||||||
Total revenue - Consumer and Small Business Banking | $ | 25,156 | $ | 1,310 | $ | 100 | (B) | $ | 26,566 | ||||
Total revenue - Card Services | 7,526 | 441 | 54 | (A) | 8,021 | ||||||||
Total revenue - Consumer and Small Business Banking excluding Card Services - Held | $ | 17,630 | $ | 869 | $ | 46 | $ | 18,545 | |||||
Net income - Consumer and Small Business Banking | $ | 5,971 | $ | 296 | $ | 10 | (B) | $ | 6,277 | ||||
Net income - Card Services | 1,435 | 122 | 6 | (A) | 1,563 | ||||||||
Net income - Consumer and Small Business Banking excluding Card Services - Held | $ | 4,536 | $ | 174 | $ | 4 | $ | 4,714 | |||||
Global Treasury Services | |||||||||||||
Total revenue | 4,637 | 307 | — | 4,944 | |||||||||
Net income | 1,257 | 119 | — | 1,376 | |||||||||
Core Net Interest Income | |||||||||||||
Net interest income (FTE) | $ | 29,511 | $ | 1,718 | $ | 82 | (C) | $ | 31,311 | ||||
Trading related net interest income | 2,039 | — | — | 2,039 | |||||||||
Core net interest income | $ | 27,472 | $ | 1,718 | $ | 82 | (C) | $ | 29,272 | ||||
(A) | - Includes pro forma adjustments A, C, G and J as described on page 35 related to Card Services. |
(B) | - Includes pro forma adjustments A, C, F, G, I and J as described on page 35 related to Global Consumer and Small Business Banking. |
(C) | - Includes pro forma adjustments A, B, C, D and E as described on page 35. |
The difference between the held and managed information above is the impact of the securitized portfolio.
36
MBNA Corporation
Financial Highlights
For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | |||||||||||||||
(Dollars in millions, except per share information) | 2005 | 2004 | 2005 | 2004 | ||||||||||||
For the Period | ||||||||||||||||
Net income | $ | 389 | $ | 769 | $ | 1,771 | $ | 2,677 | ||||||||
Total revenue | 2,509 | 2,819 | 10,275 | 10,794 | ||||||||||||
Noninterest expense | 1,658 | 1,354 | 6,541 | 5,517 | ||||||||||||
Provision for credit losses | 279 | 257 | 1,001 | 1,147 | ||||||||||||
Per Common Share | ||||||||||||||||
Earnings per common share | $ | .30 | $ | .60 | $ | 1.39 | $ | 2.08 | ||||||||
Diluted earnings per common share | .30 | .59 | 1.37 | 2.05 | ||||||||||||
Cash dividends declared | .14 | .12 | .56 | .48 | ||||||||||||
Book value (period-end) | 10.64 | 10.26 | ||||||||||||||
At Period-End | ||||||||||||||||
Assets | $ | 61,862 | $ | 61,714 | ||||||||||||
Loan receivables | 37,507 | 33,759 | ||||||||||||||
Deposits | 28,661 | 31,240 | ||||||||||||||
Total stockholders’ equity | 13,410 | 13,323 | ||||||||||||||
Ratios | ||||||||||||||||
Return on average assets | 2.50 | % | 4.96 | % | 2.86 | % | 4.39 | % | ||||||||
Return on average common stockholders’ equity | 11.70 | 23.65 | 13.61 | 22.09 | ||||||||||||
Net interest margin(1) | 5.89 | 5.36 | 5.72 | 5.33 | ||||||||||||
Total equity to total assets (period-end) | 21.68 | 21.59 | ||||||||||||||
Tier 1 capital(2) | $ | 13,804 | $ | 13,968 | ||||||||||||
Leverage ratio(2) | 22.58 | % | 22.80 | % | ||||||||||||
Tier 1 risk-based capital ratio(2) | 20.56 | 21.82 | ||||||||||||||
Total risk-based capital ratio(2) | 23.44 | 25.39 | ||||||||||||||
Asset Quality - Loan Receivables | ||||||||||||||||
Delinquency(3) | 2.54 | % | 3.29 | % | ||||||||||||
Net credit loss(4) | 4.66 | 3.74 | 3.88 | % | 4.26 | % | ||||||||||
Volume | ||||||||||||||||
Sales volume | $ | 40,382 | $ | 38,023 | $ | 148,618 | $ | 137,207 | ||||||||
Cash advance volume | 20,593 | 15,993 | 79,915 | 68,954 | ||||||||||||
Total volume | $ | 60,975 | $ | 54,016 | $ | 228,533 | $ | 206,161 | ||||||||
Managed Data(5) | ||||||||||||||||
At Period End: | ||||||||||||||||
Loan receivables | $ | 37,507 | $ | 33,759 | ||||||||||||
Securitized loans | 90,062 | 87,859 | ||||||||||||||
Total managed loans | $ | 127,569 | $ | 121,618 | ||||||||||||
Average for the Period: | ||||||||||||||||
Loan receivables | $ | 35,915 | $ | 31,474 | $ | 33,437 | $ | 31,056 | ||||||||
Securitized loans | 88,940 | 87,496 | 86,508 | 87,040 | ||||||||||||
Total managed loans | $ | 124,855 | $ | 118,970 | $ | 119,945 | $ | 118,096 | ||||||||
For the Period: | ||||||||||||||||
Delinquency(3) | 3.47 | % | 4.13 | % | ||||||||||||
Net credit loss(4) | 5.92 | 4.43 | 4.84 | % | 4.74 | % | ||||||||||
Net interest margin(1) | 6.88 | 7.94 | 7.44 | 7.98 | ||||||||||||
Total revenue | $ | 3,939 | $ | 3,841 | $ | 14,781 | $ | 15,071 | ||||||||
Provision for credit losses | 1,709 | 1,279 | 5,507 | 5,424 |
(1) | Net interest margin ratios are presented on a fully taxable equivalent basis. |
(2) | December 31, 2005 amounts are estimates. |
(3) | Delinquency represents accruing loans that are 30 days or more past due. |
(4) | MBNA Corporation’s net credit loss ratio is calculated by dividing annualized net credit losses, which exclude uncollectible accrued interest and fees and fraud losses, for the period by average loans, which include the estimated collectible billed interest and fees for the corresponding period. |
(5) | MBNA Corporation allocates resources on a managed basis, and financial data provided to management reflects MBNA Corporation’s results on a managed basis. Managed data assumes MBNA Corporation’s securitized loan principal receivables have not been sold and presents the earnings on securitized loan principal receivables in the same fashion as MBNA Corporation’s owned loans. Management, equity and debt analysts, rating agencies and others evaluate MBNA Corporation’s operations on a managed basis because the loans that are securitized are subject to underwriting standards comparable to MBNA Corporation’s owned loans, and MBNA Corporation services the securitized and owned loans, and the related accounts, together and in the same manner without regard to ownership of the loans. In a securitization, the account relationships are not sold to the trust. MBNA Corporation continues to own and service the accounts that generate the securitized loan principal receivables. The credit performance of the entire managed loan portfolio is important to understand the quality of loan originations and the related credit risks inherent in the owned portfolio and retained interests in its securitization transactions. |
Exhibit A reconciles as reported income statement data for the period to managed revenue and managed provision for credit losses, the loan receivables net credit loss ratio to the managed net credit loss ratio, the loan receivables delinquency ratio to the managed delinquency ratio, and the net interest margin ratio to the managed net interest margin ratio. Managed revenue includes the impact of the gain recognized on securitized loan principal receivables in accordance with Statement of Financial Accounting Standards No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities - a replacement of FASB Statement No. 125” (“Statement No. 140”).
37
MBNA Corporation
Consolidated Statements of Income
For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | |||||||||||
(Dollars in millions, except per share data) | 2005 | 2004 | 2005 | 2004 | ||||||||
Net interest income | $ | 718 | $ | 663 | $ | 2,767 | $ | 2,537 | ||||
Noninterest income: | ||||||||||||
Securitization income | 1,246 | 1,772 | 5,700 | 6,753 | ||||||||
Interchange | 115 | 123 | 456 | 442 | ||||||||
Loan fees | 263 | 183 | 881 | 756 | ||||||||
Insurance | 70 | 51 | 256 | 201 | ||||||||
Other | 97 | 27 | 215 | 105 | ||||||||
Total noninterest income | 1,791 | 2,156 | 7,508 | 8,257 | ||||||||
Total revenue | 2,509 | 2,819 | 10,275 | 10,794 | ||||||||
Provision for credit losses | 279 | 257 | 1,001 | 1,147 | ||||||||
Gains on sales of debt securities | — | 1 | — | 1 | ||||||||
Noninterest expense: | ||||||||||||
Personnel | 521 | 555 | 2,103 | 2,221 | ||||||||
Occupancy | 44 | 47 | 172 | 185 | ||||||||
Equipment | 120 | 111 | 468 | 405 | ||||||||
Restructuring charge | 2 | — | 766 | — | ||||||||
Merger related stock based compensation | 180 | — | 180 | — | ||||||||
Other | 791 | 641 | 2,852 | 2,706 | ||||||||
Total noninterest expense | 1,658 | 1,354 | 6,541 | 5,517 | ||||||||
Income before income taxes | 572 | 1,209 | 2,733 | 4,131 | ||||||||
Income tax expense | 183 | 440 | 962 | 1,454 | ||||||||
Net income | $ | 389 | $ | 769 | $ | 1,771 | $ | 2,677 | ||||
Earnings per common share | $ | .30 | $ | .60 | $ | 1.39 | $ | 2.08 | ||||
Diluted earnings per common share | .30 | .59 | 1.37 | 2.05 |
MBNA Corporation
Consolidated Balance Sheets - Period End
December 31, | ||||||||
(Dollars in millions) | 2005 | 2004 | ||||||
Assets: | ||||||||
Cash and cash equivalents | $ | 1,126 | $ | 950 | ||||
Investments | 6,818 | 10,734 | ||||||
Loan receivables | 37,507 | 33,759 | ||||||
Allowance for loan losses | (837 | ) | (1,137 | ) | ||||
Loan receivables, net of allowance | 36,670 | 32,622 | ||||||
Accounts receivable from securitization | 8,432 | 8,444 | ||||||
Intangible assets and goodwill, net | 3,573 | 3,573 | ||||||
Other assets | 5,243 | 5,391 | ||||||
Total assets | $ | 61,862 | $ | 61,714 | ||||
Liabilities: | ||||||||
Deposits | $ | 28,661 | $ | 31,240 | ||||
Short-term borrowings | 2,730 | 2,104 | ||||||
Long-term debt | 13,698 | 11,423 | ||||||
Other liabilities | 3,363 | 3,624 | ||||||
Total liabilities | 48,452 | 48,391 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock ($.01 par value; authorized - 20,000,000 shares; issued and outstanding - 0 and 8,573,882 shares) | — | 206 | ||||||
Common stock ($.01 par value; authorized - 1,500,000,000 shares; issued and outstanding - 1,260,047,757 and 1,277,671,875 shares) | 13,410 | 13,117 | ||||||
Total stockholders’ equity | 13,410 | 13,323 | ||||||
Total liabilities and stockholders’ equity | $ | 61,862 | $ | 61,714 | ||||
38
MBNA Corporation
Average Balances and Interest Rates – Fully Taxable Equivalent Basis(1)
For the Three Months Ended, | December 31, 2005 | December 31, 2004 | ||||||||||||||||||
(FTE Basis) (Dollars in millions) | Average Balance | Interest or Expense | Yield / Rate | Average Balance | Interest or Expense | Yield / Rate | ||||||||||||||
Assets: | ||||||||||||||||||||
Investments | $ | 8,874 | $ | 83 | 3.73 | % | $ | 13,614 | $ | 85 | 2.50 | % | ||||||||
Other interest-earning assets | 3,595 | 84 | 9.22 | 4,181 | 81 | 7.67 | ||||||||||||||
Domestic loan receivables | 23,584 | 688 | 11.56 | 21,131 | 635 | 11.95 | ||||||||||||||
Foreign loan receivables | 12,331 | 327 | 10.53 | 10,343 | 265 | 10.20 | ||||||||||||||
Total interest-earning assets | 48,384 | 1,182 | 9.69 | 49,269 | 1,066 | 8.61 | ||||||||||||||
Allowance for loan losses | (941 | ) | (1,147 | ) | ||||||||||||||||
Other assets | 14,350 | 13,577 | ||||||||||||||||||
Total assets | $ | 61,793 | $ | 61,699 | ||||||||||||||||
Liabilities: | ||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||
Domestic time deposits | $ | 18,451 | 185 | 3.99 | $ | 20,834 | 204 | 3.90 | ||||||||||||
Domestic money market deposit accounts | 6,441 | 62 | 3.81 | 6,876 | 30 | 1.74 | ||||||||||||||
Domestic other deposits | 14 | — | 3.40 | 159 | 1 | 1.62 | ||||||||||||||
Foreign time deposits | 977 | 7 | 2.69 | 1,295 | 14 | 4.46 | ||||||||||||||
Total interest-bearing deposits | 25,883 | 254 | 3.90 | 29,164 | 249 | 3.40 | ||||||||||||||
Short-term borrowings | 2,199 | 25 | 4.51 | 1,921 | 26 | 5.34 | ||||||||||||||
Long-term debt | 13,756 | 184 | 5.30 | 11,437 | 128 | 4.44 | ||||||||||||||
Total interest-bearing liabilities | 41,838 | 463 | 4.39 | 42,522 | 403 | 3.77 | ||||||||||||||
Noninterest-bearing deposits | 2,828 | 2,701 | ||||||||||||||||||
Other liabilities | 3,926 | 3,335 | ||||||||||||||||||
Total liabilities | 48,592 | 48,558 | ||||||||||||||||||
Stockholders’ equity | 13,201 | 13,141 | ||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 61,793 | $ | 61,699 | ||||||||||||||||
Net interest income | $ | 719 | $ | 663 | ||||||||||||||||
Net interest margin | 5.89 | 5.36 | ||||||||||||||||||
Net interest spread | 5.30 | 4.84 |
For the Twelve Months Ended, | December 31, 2005 | December 31, 2004 | ||||||||||||||||||
(FTE Basis) (Dollars in millions) | Average Balance | Interest or Expense | Yield / Rate | Average Balance | Interest or Expense | Yield / Rate | ||||||||||||||
Assets: | ||||||||||||||||||||
Investments | $ | 11,213 | $ | 376 | 3.35 | % | $ | 12,446 | $ | 262 | 2.11 | % | ||||||||
Other interest-earning assets | 3,793 | 337 | 8.88 | 4,121 | 316 | 7.67 | ||||||||||||||
Domestic loan receivables | 21,563 | 2,550 | 11.83 | 21,496 | 2,517 | 11.71 | ||||||||||||||
Foreign loan receivables | 11,874 | 1,260 | 10.62 | 9,560 | 975 | 10.20 | ||||||||||||||
Total interest-earning assets | 48,443 | 4,523 | 9.34 | 47,623 | 4,070 | 8.55 | ||||||||||||||
Allowance for loan losses | (1,035 | ) | (1,206 | ) | ||||||||||||||||
Other assets | 14,480 | 14,536 | ||||||||||||||||||
Total assets | $ | 61,888 | $ | 60,953 | ||||||||||||||||
Liabilities: | ||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||
Domestic time deposits | $ | 19,843 | 777 | 3.92 | $ | 20,849 | 830 | 3.98 | ||||||||||||
Domestic money market deposit accounts | 6,390 | 193 | 3.02 | 7,437 | 121 | 1.62 | ||||||||||||||
Domestic other deposits | 72 | 2 | 2.48 | 137 | 2 | 1.24 | ||||||||||||||
Foreign time deposits | 1,245 | 48 | 3.87 | 818 | 29 | 3.57 | ||||||||||||||
Total interest-bearing deposits | 27,550 | 1,020 | 3.70 | 29,241 | 982 | 3.36 | ||||||||||||||
Short-term borrowings | 2,241 | 97 | 4.33 | 1,923 | 77 | 4.00 | ||||||||||||||
Long-term debt | 12,623 | 637 | 5.05 | 11,715 | 473 | 4.04 | ||||||||||||||
Total interest-bearing liabilities | 42,414 | 1,754 | 4.14 | 42,879 | 1,532 | 3.57 | ||||||||||||||
Noninterest-bearing deposits | 2,810 | 2,653 | ||||||||||||||||||
Other liabilities | 3,491 | 3,093 | ||||||||||||||||||
Total liabilities | 48,715 | 48,625 | ||||||||||||||||||
Stockholders’ equity | 13,173 | 12,328 | ||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 61,888 | $ | 60,953 | ||||||||||||||||
Net interest income | $ | 2,769 | $ | 2,538 | ||||||||||||||||
Net interest margin | 5.72 | 5.33 | ||||||||||||||||||
Net interest spread | 5.20 | 4.98 |
(1) | Fully taxable-equivalent basis is a performance measure used by management in operating the business that management believes provides investors with a more accurate picture of the interest margin for comparative purposes. |
39
MBNA Corporation
Exhibit A(Dollars in millions)
RECONCILIATION OF INCOME STATEMENT DATA FOR THE PERIOD TO MANAGED REVENUE AND MANAGED PROVISION FOR CREDIT LOSSES
For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | |||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||
Total revenue: | ||||||||||||
Total revenue | $ | 2,509 | $ | 2,819 | $ | 10,275 | $ | 10,794 | ||||
Securitization adjustments | 1,430 | 1,022 | 4,506 | 4,277 | ||||||||
Managed revenue | $ | 3,939 | $ | 3,841 | $ | 14,781 | $ | 15,071 | ||||
Provision for credit losses: | ||||||||||||
Provision for credit losses | $ | 279 | $ | 257 | $ | 1,001 | $ | 1,147 | ||||
Securitization adjustments | 1,430 | 1,022 | 4,506 | 4,277 | ||||||||
Managed provision for credit losses | $ | 1,709 | $ | 1,279 | $ | 5,507 | $ | 5,424 | ||||
RECONCILIATION OF THE LOAN RECEIVABLES NET CREDIT LOSS RATIO TO THE MANAGED NET CREDIT LOSS RATIO
Net Credit Losses(1) | Average Loans Outstanding | Net Credit Loss Ratio(1) | |||||||
For the Three Months Ended December 31, 2005 | |||||||||
Loan receivables | $ | 419 | $ | 35,915 | 4.66 | % | |||
Securitized loans | 1,430 | 88,940 | 6.43 | ||||||
Managed loans | $ | 1,849 | $ | 124,855 | 5.92 | ||||
For the Twelve Months Ended December 31, 2005 | |||||||||
Loan receivables | $ | 1,297 | $ | 33,437 | 3.88 | ||||
Securitized loans | 4,506 | 86,508 | 5.21 | ||||||
Managed loans | $ | 5,803 | $ | 119,945 | 4.84 | ||||
For the Three Months Ended December 31, 2004 | |||||||||
Loan receivables | $ | 295 | $ | 31,474 | 3.74 | ||||
Securitized loans | 1,022 | 87,496 | 4.67 | ||||||
Managed loans | $ | 1,317 | $ | 118,970 | 4.43 | ||||
For the Twelve Months Ended December 31, 2004 | |||||||||
Loan receivables | $ | 1,324 | $ | 31,056 | 4.26 | ||||
Securitized loans | 4,277 | 87,040 | 4.91 | ||||||
Managed loans | $ | 5,601 | $ | 118,096 | 4.74 | ||||
RECONCILIATION OF THE LOAN RECEIVABLES DELINQUENCY RATIO TO THE MANAGED DELINQUENCY RATIO
Delinquent Balances(2) | Ending Loans Outstanding | Delinquency Ratio(2) | |||||||
December 31, 2005 | |||||||||
Loan receivables | $ | 951 | $ | 37,507 | 2.54 | % | |||
Securitized loans | 3,478 | 90,062 | 3.86 | ||||||
Managed loans | $ | 4,429 | $ | 127,569 | 3.47 | ||||
December 31, 2004 | |||||||||
Loan receivables | $ | 1,111 | $ | 33,759 | 3.29 | ||||
Securitized loans | 3,914 | 87,859 | 4.45 | ||||||
Managed loans | $ | 5,025 | $ | 121,618 | 4.13 | ||||
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MBNA Corporation
Exhibit A(Dollars in millions)
RECONCILIATION OF THE NET INTEREST MARGIN RATIO TO THE MANAGED NET INTEREST MARGIN RATIO
Average Earning Assets | Net Interest Income | Net Interest Margin Ratio | ||||||||
For the Three Months Ended December 31, 2005 | ||||||||||
Net interest margin(3): | ||||||||||
Investments | $ | 8,874 | ||||||||
Other interest-earning assets | 3,595 | |||||||||
Loan receivables | 35,915 | |||||||||
Total | $ | 48,384 | $ | 719 | 5.89 | % | ||||
Securitization adjustments: | ||||||||||
Investments | $ | — | ||||||||
Other interest-earning assets | (3,513 | ) | ||||||||
Securitized loans | 88,940 | |||||||||
Total | $ | 85,427 | 1,603 | 7.44 | ||||||
Managed net interest margin(3): | ||||||||||
Investments | $ | 8,874 | ||||||||
Other interest-earning assets | 82 | |||||||||
Managed loans | 124,855 | |||||||||
Total | $ | 133,811 | 2,322 | 6.88 | ||||||
For the Twelve Months Ended December 31, 2005 | ||||||||||
Net interest margin(3): | ||||||||||
Investments | $ | 11,213 | ||||||||
Other interest-earning assets | 3,793 | |||||||||
Loan receivables | 33,437 | |||||||||
Total | $ | 48,443 | 2,769 | 5.72 | ||||||
Securitization adjustments: | ||||||||||
Investments | $ | — | ||||||||
Other interest-earning assets | (3,715 | ) | ||||||||
Securitized loans | 86,508 | |||||||||
Total | $ | 82,793 | 6,998 | 8.45 | ||||||
Managed net interest margin(3): | ||||||||||
Investments | $ | 11,213 | ||||||||
Other interest-earning assets | 78 | |||||||||
Managed loans | 119,945 | |||||||||
Total | $ | 131,236 | 9,767 | 7.44 | ||||||
41
MBNA Corporation
Exhibit A(Dollars in millions)
RECONCILIATION OF THE NET INTEREST MARGIN RATIO TO THE MANAGED NET INTEREST MARGIN RATIO - continued
Average Earning Assets | Net Interest Income | Net Interest Margin Ratio | ||||||||
For the Three Months Ended December 31, 2004 | ||||||||||
Net interest margin(3): | ||||||||||
Investments | $ | 13,614 | ||||||||
Other interest-earning assets | 4,181 | |||||||||
Loan receivables | 31,474 | |||||||||
Total | $ | 49,269 | $ | 663 | 5.36 | % | ||||
Securitization adjustments: | ||||||||||
Investments | $ | — | ||||||||
Other interest-earning assets | (4,110 | ) | ||||||||
Securitized loans | 87,496 | |||||||||
Total | $ | 83,386 | 1,983 | 9.46 | ||||||
Managed net interest margin(3): | ||||||||||
Investments | $ | 13,614 | ||||||||
Other interest-earning assets | 71 | |||||||||
Managed loans | 118,970 | |||||||||
Total | $ | 132,655 | 2,646 | 7.94 | ||||||
For the Twelve Months Ended December 31, 2004 | ||||||||||
Net interest margin(3): | ||||||||||
Investments | $ | 12,446 | ||||||||
Other interest-earning assets | 4,121 | |||||||||
Loan receivables | 31,056 | |||||||||
Total | $ | 47,623 | 2,538 | 5.33 | ||||||
Securitization adjustments: | ||||||||||
Investments | $ | — | ||||||||
Other interest-earning assets | (4,050 | ) | ||||||||
Securitized loans | 87,040 | |||||||||
Total | $ | 82,990 | 7,884 | 9.50 | ||||||
Managed net interest margin(3): | ||||||||||
Investments | $ | 12,446 | ||||||||
Other interest-earning assets | 71 | |||||||||
Managed loans | 118,096 | |||||||||
Total | $ | 130,613 | 10,422 | 7.98 | ||||||
(1) | MBNA Corporation’s net credit loss ratio is calculated by dividing annualized net credit losses, which exclude uncollectible accrued interest and fees and fraud losses, for the period by average loans, which include the estimated collectible billed interest and fees for the corresponding period. |
(2) | Delinquency represents accruing loans that are 30 days or more past due. |
(3) | Fully taxable-equivalent basis is a performance measure used by management in operating the business that management believes provides investors with a more accurate picture of the interest margin for comparative purposes. |
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