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Investor Fact BookMid Year 2008
Investor Relations:
Kevin Stitt 704.386.5667
Lee McEntire 704.388.6780
Leyla Pakzad 704.386.2024
Internet address: http://investor.bankofamerica.com
1
Table of Contents
I. The CompanyOur Company Today 2
Leadership Team 3
Board of Directors 4
Industry Rankings 5
Bank of America Today 6
International Presence 7
U.S.Deposit Market Share 8
Banking Center Network 9
ATM Network 10
II. Financial OverviewFinancial Highlights 12
Supplemental Financial Data 13
Income Statement 14
Balance Sheet Composition 15
Balance Sheet 16
Earnings Per Share 17
Dividends Per Share and Payout Ratio 18
Return on Equity 19
Return on Assets 20
Noninterest Income - Annual 21
Noninterest Income – Quarterly 22
Noninterest Expense - Annual 23
Noninterest Expense – Quarterly 24
Net Interest Income and Yield – Annual 25
Net Interest Income and Yield – Quarterly 26
Quarterly Average Balance Sheet Rates & Yields Table 27
Loan Portfolio 28
Nonperforming Assets 29-30
Net Charge-Offs 31-32
Performance by Geographic Area 33
Capital Levels 34
Efficiency Ratio 35
Dividend Record 36
Capital Returned to Shareholders 37
Total Return to Shareholders 38
Debt Ratings 39
III. Business Segment Business Segment Revenue Mix 41
Recent Events and Line of Business
Financial Performance 42-45
IV. Global Consumer & Small Business BankOverview 46
Deposits 47-48
Card Services 49-51
Consumer Real Estate 52-54
Small Business Banking 55
Ecommerce/Online Banking/ATM Network 56
Financials 57-59
V. Global Corporate & Investment BankingOverview, Commercial Bank , Investment Bank 60-64
Markets 65
Product Solutions 66
International 67
Financials 68-71
VII. Global Wealth & Investment ManagementOverview 72
Premier Banking and Investments 73
US Trust, Bank of America Private Wealth Management 74
Columbia Management 75
Financials 76-78
VIII. All OtherFinancials 79
Private Equity Investments Group 80
2
Our Company Today
Our company today
Bank of America is the largest retail bank in the U.S., a top wealth manager and private bank, and a global wholesale bank for businesses of all sizes.
Strengths
Size and Scale – Customers benefit from our size and scale through greater convenience, efficiency, relationship pricing and our ability to invest in the best ideas.
Insights and Innovation – Our large customer base produces data that enables us to better understand and anticipate customers’ and clients’ changing needs, driving industry-leading product and service innovation.
Integrated Delivery – By integrating product, service and channel teams, we provide comprehensive financial solutions that fit customers’ and clients’ specific and changing needs.
Superior Execution – We have a strong culture of superior execution, and are constantly improving accuracy and precision.
Capital Strength – Our balance sheet strength and ample liquidity give us the financial flexibility to support our customers and clients regardless of economic conditions.
Service Quality – We are succeeding in building a culture of service excellence in many areas of our company, with the skills, technology and infrastructure to back it up…
Our strategy for long-term growth
We are growing our company by creating opportunity for all our customers and clients. Key components of our strategy include:
– Investing for Growth – We are investing in our best growth opportunities, such as deposits, home lending, card services, mass affluent, retirement, business banking, treasury management and equity capital markets
– Customer/Client Satisfaction – Associates are working to improve satisfaction and create solutions through Bank of America Spirit program and other initiatives
– Talent and Leadership – We are building on our leading staffing, training and leadership development programs to grow our talent advantage for the future
– Quality and Productivity – We use Six Sigma tools to redesign processes that cross boundaries of business lines, support units and delivery channels, improving quality, accuracy and efficiency for customers while lowering costs
– Risk & Reward – We are managing risk and reward across the company to minimize volatility from credit, market and operational risks, while ensuring we are taking the appropriate risks to grow the company
– Community Support – We work to strengthen the many communities we serve through community development banking, philanthropy and environmental initiatives
Our focused execution of these strategies will help us create more opportunity for customers, shareholders, associates and communities than any other financial services company.
3
Bank of America Leadership
Kenneth D. LewisChairman, Chief Executive Officer and President, Bank of America Corporation
Joe L. PriceChief Financial Officer, Bank of America Corporation
J. Steele AlphinChief Administrative Officer, Bank of America Corporation
Amy Woods Brinkley Global Risk Executive, Bank of America Corporation
Liam E. McGee President, Global Consumer and Small Business Banking
Barbara J. Desoer President, Mortgage, Home Equity & Insurance Services
Bruce HammondsPresident, Card Services, Bank of America
Keith Banks President, Global Wealth & Investment Management
Brian Moynihan President, Global Corporate & Investment Banking
Greg CurlGlobal Corporate Strategy and Planning Executive
4
Bank of America Board of Directors
Lead Director
O. Temple Sloan, Jr.
Directors
William Barnet, III, (65)Chairman, President and Chief Executive Officer, The Barnet Company
Frank P. Bramble, Sr. (59)Former Executive Officer, MBNA Corporation
John T. Collins, (61)Chief Executive Officer, The Collins Group, Inc.
Gary L. Countryman, (68)Chairman Emeritus, Liberty Mutual Group
Tommy R. Franks, (62)Retired General, United States Army
Charles K. Gifford, (65)Former Chairman, Bank of America Corporation
Kenneth D. Lewis, (60)Chairman, Chief Executive Officer and President, Bank of America Corporation
Monica C Lozano, (51)Publisher and Chief Executive Officer of La Opinion
Walter E. Massey, (69)President Emeritus, Morehouse College
Thomas J. May , (60)Chairman, President and Chief Executive Officer, NSTAR
Patricia E. Mitchell, (65)President and Chief Executive Officer, The Paley Center for Media
Thomas M. Ryan, (55)Chairman, President and Chief Executive Officer , CVS/Caremark Corporation
O. Temple Sloan, Jr., (69)Chairman and Chief Executive Officer, General Parts International, Inc.
Meredith R. Spangler, (70)Trustee and Board Member
Robert L. Tillman, (64)Chairman and CEO Emeritus, Lowe's Companies, Inc.,
Jackie M. Ward, (69)Retired Chairman/CEO, Computer Generation, Inc.
5
Industry Rankings
TOP 10 U.S. BANKING COs.(IN ASSETS @ 6/30/08)
$ in Billions
TOP 10 U.S. BANKING COs.(IN EQUITY @ 6/30/08)
$ in Millions
TOP 10 U.S. BANKING COs.(1H08 EARNINGS*)
$ in Millions
TOP 10 U.S. BANKING COs.(IN MARKET CAP @ 6/30/08)
$ in Billions
TOP 10 CORPORATIONS WORLDWIDE
(IN MARKET CAP @ 6/30/08)$ in Billions
TOP 10 CORPORATIONS WORLDWIDE
(1H08 EARNINGS)$ in Millions
1. JPMorgan Chase ($118)
2. Bank of America ($106)
3. Citigroup ($91)
4. Wells Fargo ($79)
5. U.S. Bancorp ($49)
6. Bank of New York/ Mellon ($43)
7. Wachovia ($34)
8. State Street ($28)
9. PNC Financial Services Group ($20)
10. Northern Trust ($15)
1. Exxon Mobil ($466)
2. PetroChina Co Ltd ($380)
3. Gaxprom OAO ($342)
4. Petroleo Brasileiro SA ($285)
5. China Mobil Ltd ($269)
6. General Electric ($266)
7. Microsoft Corp ($256)
8. Royal Dutch Shell PLC ($247)
9. Industrial & Commercial Bankof China ($238)
10. Wal-Mart Stores Inc ($222)
44. Bank of America ($106)
1. Exxon Mobil ($22,570)
2. Royal Dutch/Shell ($21,707)
3. BP PLC ($16.946)
4. Chevron ($11,143)
5. GE ($9,755)
6. Conocophillips ($9,578)
7. Endesa SA ($9,462)
8. Industrial & Commercial Bankof China ($9,422)
9. Microsoft Corp. ($8,996)
10. Arcelormittal ($8,662)
23. Bank of America ($4,244)
1. JPMorgan Chase ($4,286)
2. Bank of America ($4,244)3. Wells Fargo ($3,752)
4. U.S. Bancorp ($2,006)
5. State Street ($1,078)6. Bank of NY Mellon ($1,055)
7. Capital One ($1,001)
8. PNC Financial Services Group ($882)
9. BB&T ($856)
10.SunTrust ($819) * Net income available to common shareholders
1. Bank of America ($162,691)
2. Citigroup ($136,556)3. JPMorgan Chase ($133,176)
4. Wachovia ($75,379)
5. Wells Fargo ($47,964)6. Bank of NY Mellon ($28,569)
7. Washington Mutual ($26,086)
8. Capital One ($24,921)9. U.S. Bancorp ($21,828)
10. Regions Financial ($19,708)
1. Citigroup ($2,101)
2. JPMorgan Chase ($1,776)3. Bank of America ($1,717)
4. Wachovia ($812)
5. Wells Fargo ($609)6. Washington Mutual ($310)
7. U.S. Bancorp ($247)
8. Bank of N Mellon ($201)9. SunTrust ($177)
10. Countrywide Financial ($172)
•Net income available to common shareholders
•Earnings ranking based on those companies that have announced by August 21, 2008.
6
Bank of America Today
($ in millions, except EPS and market price)
June 30 , 2008
Assets $1,716,875
Loans & leases 870,464
Domestic deposits 697,218
Foreign deposits 87,546
Shareholders' equity 162,691
Market capitalization 106,292
Market price 23.87
Common outstanding shares (in 000’s) 4,452,947
Six Months Ended June 30, 2008
Revenue $37,318
Earnings, available to common shareholders 4,244
Diluted EPS 0.95
Return on Equity 6.06%
Employees 206,597
Banking centers (Domestic) 6,131
ATMs (Domestic) 18,531
7
International Presence
AUSTRALIAMelbourneSydney
BELGIUMAntwerp
CANADACalgaryMontréalOttawaTorontoVancouver
FRANCEParis
GERMANYFrankfurt
GREECEAthens
INDIABangaloreChennaiHyderabadKolkataMumbaiNew Delhi
INDONESIAJakarta
IRELANDDublin
ITALYMilan
JAPANTokyo
MALAYSIAKuala LumpurLabuan
MEXICOMexico City
PEOPLE’SREPUBLIC OF CHINABeijingGuangzhouHong Kong SARShanghai
THE NETHERLANDSAmsterdam
THE PHILIPPINESManila
SINGAPORESingapore
SOUTHKOREASeoul
SPAINMadrid
TAIWANTaipei
THAILANDBangkok
UNITED KINGDOMBromleyCroydenLondon
UNITED STATES
8
U.S. Deposit Market ShareU.S. Deposit Market Share
Source: SNL Branch Data Source. Deposits are as of June 2007, adjusted for completed transactions as of June 30, 2008.
WA#1 (22%)
OR#4 (12%) ID
#4 (5%)
CA#1 (21%)
NV#4 (5%)
AZ#2 (19%) NM
#2 (16%)
KS#2 (6%)
OK#5 (5%)
TX#3 (11%)
IA#9 (2%)
MO #2 (10%)
AR#4 (5%)
IL#1
(12%)
TN #4 (6%)
GA #3 (9%)
SC #2 (11%)
NC #2 (15%)
VA
#5 (9%)MD
#1 (18%)
DC#3 (13%)
FL #2 (18%)
NY
#4 (5%)
PA#14 (2%)
CT#1 (19%)
RI#2 (26%)
NJ #1 (15%)
MA#1 (18%)
ME#4
7%
NH#3 (12%)
DE #4 (11%)
MI#1
(15%)
#2
#1
#3
#4+
9
Tennessee
Nevada
Florida
Texas
California
VirginiaMissouri
District of Columbia
Illinois
Idaho
MarylandKansas
North Carolina
South Carolina
Georgia
ArkansasOklahomaNew Mexico
Arizona
Oregon
Washington
236
86
21
88
991
172 52
469
45
63
50
220
87
15
225
655
123
200
193
30
207134
Banking Center Network
1-5051-7576-150151-200201-300>301
Iowa
Total U.S. Banking Centers: 6,131
Kentucky2
Connecticut176
Massachusetts304
Maine41
New Hampshire36
New Jersey402
New York377
Pennsylvania119
Rhode Island
48
Delaware2
Indiana6
Michigan
256
10
ATM Network
1-5051-100101-300
301-500501-1000>1001
Total U.S. (Branded Only) ATMs: 18,531
306Nevada
508North Carolina
74
985
200
1,424
674
2855
15
260
9
27
77
726
6485
20
26
114159
37
1,864
77176
4,036
4
634
1,344
721
28
585
96
491
345
306
188
678
Virginia
South Carolina
Missouri
New York
District of Columbia
Massachusetts
New Jersey
Delaware
Maryland
Pennsylvania
OhioIndiana
Kentucky
Tennessee
Georgia
Florida
Alabama
Louisiana
Illinois
Kansas
Oklahoma
Texas
New Mexico
MichiganWisconsin
Iowa
Minnesota
ColoradoUtah
Arizona
California
Idaho
Oregon
Washington Maine
Mississippi2
Montana1
4
New Hampshire
Wyoming 4South Dakota
85
Connecticut368
Rhode island113
Nebraska3
Arkansas
Financial Overview
12
Financial Highlights
(Dollars in millions, except per share information; shares in thousands)
Second First Fourth Third SecondQuarter Quarter Quarter Quarter Quarter
2008 2007 2008 2008 2007 2007 2007
Income statement Net interest income $20,612 $16,659 $10,621 $9,991 $9,165 $8,617 $8,389Noninterest income 16,706 21,181 9,694 7,012 3,564 7,383 11,236
Total revenue, net of interest expense 37,318 37,840 20,315 17,003 12,729 16,000 19,625
Provision for credit losses 11,840 3,045 5,830 6,010 3,310 2,030 1,810
Noninterest expense, before merger and
restructuring charges 18,377 18,126 9,352 9,025 10,194 8,530 9,080
Merger and restructuring charges 382 186 212 170 140 84 75
Income tax expense (benefit) 2,099 5,467 1,511 588 (1,183) 1,658 2,899
Net income 4,620 11,016 3,410 1,210 268 3,698 5,761
Diluted earnings per common share 0.95 2.44 0.72 0.23 0.05 0.82 1.28
Average diluted common shares issued
and outstanding 4,460,633 4,487,224 4,457,193 4,461,201 4,470,108 4,475,917 4,476,799
Dividends paid per common share $1.28 $1.12 $0.64 $0.64 $0.64 $0.64 $0.56
Performance ratios
Return on average assets 0.53 % 1.44 % 0.78 % 0.28 % 0.06 % 0.93 % 1.48 %
Return on average common shareholders' equity 6.06 16.86 9.25 2.90 0.60 11.02 17.55
At period end
Book value per share of common stock $31.11 $29.95 $31.11 $31.22 $32.09 $30.45 $29.95
Tangible book value per share of common stock (1 13.65 15.11 13.65 13.73 14.62 15.25 15.11
Market price per share of common stock:
Closing price $23.87 $48.89 $23.87 $37.91 $41.26 $50.27 $48.89
High closing price for the period 45.03 54.05 40.86 45.03 52.71 51.87 51.82
Low closing price for the period 23.87 48.80 23.87 35.31 41.10 47.00 48.80
Market capitalization 106,292 216,922 106,292 168,806 183,107 223,041 216,922
Number of banking centers - domestic 6,131 5,749 6,131 6,148 6,149 5,748 5,749
Number of branded ATMs - domestic 18,531 17,183 18,531 18,491 18,753 17,231 17,183
Full-time equivalent employees 206,587 195,675 206,587 209,096 209,718 198,000 195,675
(1) Tangible book value per share of common stock is a non-GAAP measure. For a corresponding reconciliation of common tangible shareholders' equity to a GAAP financial measure, see Supplemental
Financial Data on page 3. We believe the use of this non-GAAP measure provides additional clarity in assessing the results of the Corporation.
Certain prior period amounts have been reclassified to conform to current period presentation.
June 30Six Months Ended
13
Supplemental Financial Data
Bank of America Corporation and Subsidiaries
Supplemental Financial Data (Dollars in millions)
Fully taxable-equivalent basis data
Second First Fourth Third SecondQuarter Quarter Quarter Quarter Quarter
2008 2007 2008 2008 2007 2007 2007
Net interest income $21,228 $17,383 $10,937 $10,291 $9,815 $8,992 $8,784
Total revenue, net of interest expense 37,934 38,564 20,631 17,303 13,379 16,375 20,020
Net interest yield 2.83 % 2.60 % 2.92 % 2.73 % 2.61 % 2.61 % 2.59 %
Efficiency ratio 49.45 47.48 46.35 53.14 77.24 52.61 45.73
Reconciliation to GAAP financial measuresSupplemental financial data presented on an operating basis is a basis of presentation not defined by accounting principles generally accepted in the United States (GAAP) that excludes merger and restructuring charges. We believe that the exclusion of merger and restructuring charges, which represent events outside our normal operations, provides a meaningful period-to-period comparison and is more reflective of normalized operations.
Return on average common shareholders' equity and return on average tangible shareholders' equity utilize non-GAAP allocation methodologies. Return on average common shareholders' equity measures the earnings contribution of a unit as a percentage of the shareholders’ equity allocated to that unit. Return on average tangible shareholders' equity measures the earnings contribution of the Corporation as a percentage of shareholders’ equity reduced by goodwill. These measures are used to evaluate our use of equity (i.e., capital) at the individual unit level and are integral components in the analytics for resource allocation. The efficiency ratio measures the costs expended to generate a dollar of revenue. We believe the use of these non-GAAP measures provides additional clarity in assessing the results of the Corporation.
Other companies may define or calculate supplemental financial data differently. See the tables below for supplemental financial data and corresponding reconciliations to GAAP financial measures forthe three months ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007, and the six months ended June 30, 2008 and 2007.
Reconciliation of net income to operating earningsSecond First Fourth Third SecondQuarter Quarter Quarter Quarter Quarter
2008 2007 2008 2008 2007 2007 2007Net income $4,620 $11,016 $3,410 $1,210 $268 $3,698 $5,761Merger and restructuring charges 382 186 212 170 140 84 75 Related income tax benefit (141) (69) (78) (63) (52) (31) (28)
Operating earnings $4,861 $11,133 $3,544 $1,317 $356 $3,751 $5,808
Reconciliation of ending common shareholders' equity to ending common tangible shareholders' equity
Ending common shareholders' equity $138,540 $132,900 $138,540 $139,003 $142,394 $135,109 $132,900Ending goodwill (77,760) (65,845) (77,760) (77,872) (77,530) (67,433) (65,845)
Ending common tangible shareholders' equity $60,780 $67,055 $60,780 $61,131 $64,864 $67,676 $67,055
Reconciliation of average shareholders' equity to average tangible shareholders' equity
Average shareholders' equity $158,078 $133,569 $161,428 $154,728 $144,924 $134,487 $133,551Average goodwill (77,721) (65,703) (77,815) (77,628) (78,308) (67,499) (65,704)
Average tangible shareholders' equity $80,357 $67,866 $83,613 $77,100 $66,616 $66,988 $67,847
Operating basis
Return on average assets 0.56 % 1.46 % 0.81 % 0.30 % 0.08 % 0.94 % 1.49 %Return on average common shareholders' equity 6.40 17.04 9.63 3.20 0.85 11.18 17.70 Return on average tangible shareholders' equity 12.17 33.08 17.05 6.87 2.12 22.21 34.34 Efficiency ratio (1) 48.44 47.00 45.32 52.16 76.19 52.10 45.35
(1) Fully taxable-equivalent basis
Certain prior period amounts have been reclassified to conform to current period presentation.
June 30
Six Months EndedJune 30
Six Months Ended
14
Income Statement
(Dollars in millions, except per share information; shares in thousands)Second First Fourth Third SecondQuarter Quarter Quarter Quarter Quarter
2008 2007 2008 2008 2007 2007 2007Interest income
Interest and fees on loans and leases $27,536 $26,207 $13,121 $14,415 $15,363 $14,111 $13,323Interest on debt securities 5,674 4,712 2,900 2,774 2,738 2,334 2,332 Federal funds sold and securities purchased under agreements to resell 2,008 4,135 800 1,208 1,748 1,839 2,156 Trading account assets 4,593 4,540 2,229 2,364 2,358 2,519 2,267 Other interest income 2,075 2,198 977 1,098 1,272 1,230 1,154
Total interest income 41,886 41,792 20,027 21,859 23,479 22,033 21,232 Interest expense
Deposits 8,108 8,295 3,520 4,588 5,253 4,545 4,261 Short-term borrowings 7,229 10,850 3,087 4,142 5,598 5,519 5,534 Trading account liabilities 1,589 1,713 749 840 825 906 821 Long-term debt 4,348 4,275 2,050 2,298 2,638 2,446 2,227
Total interest expense 21,274 25,133 9,406 11,868 14,314 13,416 12,843 Net interest income 20,612 16,659 10,621 9,991 9,165 8,617 8,389
Noninterest income Card income 7,090 6,891 3,451 3,639 3,591 3,595 3,558 Service charges 5,035 4,272 2,638 2,397 2,415 2,221 2,200 Investment and brokerage services 2,662 2,342 1,322 1,340 1,427 1,378 1,193 Investment banking income 1,171 1,412 695 476 544 389 774 Equity investment income 1,646 2,843 592 1,054 317 904 1,829 Trading account profits (losses) (1,426) 1,879 357 (1,783) (5,380) (1,388) 949 Mortgage banking income 890 361 439 451 386 155 148 Gains on sales of debt securities 352 64 127 225 109 7 2 Other income (loss) (714) 1,117 73 (787) 155 122 583
Total noninterest income 16,706 21,181 9,694 7,012 3,564 7,383 11,236 Total revenue, net of interest expense 37,318 37,840 20,315 17,003 12,729 16,000 19,625
Provision for credit losses 11,840 3,045 5,830 6,010 3,310 2,030 1,810
Noninterest expense
Personnel 9,146 9,762 4,420 4,726 4,822 4,169 4,737 Occupancy 1,697 1,457 848 849 827 754 744 Equipment 768 682 372 396 373 336 332 Marketing 1,208 1,092 571 637 712 552 537 Professional fees 647 512 362 285 404 258 283 Amortization of intangibles 893 780 447 446 467 429 391 Data processing 1,150 909 587 563 590 463 472 Telecommunications 526 495 266 260 263 255 244 Other general operating 2,342 2,437 1,479 863 1,736 1,314 1,340 Merger and restructuring charges 382 186 212 170 140 84 75
Total noninterest expense 18,759 18,312 9,564 9,195 10,334 8,614 9,155 Income (loss) before income taxes 6,719 16,483 4,921 1,798 (915) 5,356 8,660
Income tax expense (benefit) 2,099 5,467 1,511 588 (1,183) 1,658 2,899 Net income $4,620 $11,016 $3,410 $1,210 $268 $3,698 $5,761
Preferred stock dividends 376 86 186 190 53 43 40 Net income available to common shareholders $4,244 $10,930 $3,224 $1,020 $215 $3,655 $5,721
Per common share information
Earnings $0.96 $2.47 $0.73 $0.23 $0.05 $0.83 $1.29Diluted earnings 0.95 2.44 0.72 0.23 0.05 0.82 1.28 Dividends paid 1.28 1.12 0.64 0.64 0.64 0.64 0.56
Average common shares issued and outstanding 4,431,870 4,426,046 4,435,719 4,427,823 4,421,554 4,420,616 4,419,246 Average diluted common shares issued and outstanding 4,460,633 4,487,224 4,457,193 4,461,201 4,470,108 4,475,917 4,476,799
Certain prior period amounts have been reclassified to conform to current period presentation.
Six Months EndedJune 30
15
Balance Sheet Composition
Assets – 6/30/08 $1.717 Trillion
Liabilities & Equity – 6/30/08
Debt Securities$250B15%
Loans$870B51%
Market-based Assets$325B19%
Goodwill & Intangibles$87B5%
Cash $39B2%
Other$146B
8%
Short-term Borrowings
$508B 30%
Foreign Deposits$88B 5%
Domestic Deposits$697B 41%
Other Liabilities$54B 3%
Long-term Debt$207B 12%
Equity$163B
9%
16
Balance Sheet
(Dollars in millions)
Assets
Cash and cash equivalents $39,127 $40,512 $35,499
Time deposits placed and other short-term investments 7,649 8,807 13,151
Federal funds sold and securities purchased under agreements to resell 107,070 120,289 131,658
Trading account assets 167,837 165,693 182,404
Derivative assets 42,039 50,925 29,810
Debt securities 249,859 223,000 173,327
Loans and leases, net of allowance: Loans and leases 870,464 873,870 758,635
Allowance for loan and lease losses (17,130) (14,891) (9,060)
Total loans and leases, net of allowance 853,334 858,979 749,575
Premises and equipment, net 11,627 11,297 9,482 Mortgage servicing rights (includes $4,250, $3,163 and $3,269 measured at fair value) 4,577 3,470 3,508
Goodwill 77,760 77,872 65,845
Intangible assets 9,603 9,821 8,720 Other assets 146,393 165,837 131,380
Total assets $1,716,875 $1,736,502 $1,534,359
Liabilities
Deposits in domestic offices:
Noninterest-bearing $199,587 $193,789 $172,573
Interest-bearing 497,631 506,062 422,201
Deposits in foreign offices:
Noninterest-bearing 3,432 3,333 3,006
Interest-bearing 84,114 93,885 101,629
Total deposits 784,764 797,069 699,409
Federal funds purchased and securities sold under agreements to repurchase 238,123 219,738 221,064
Trading account liabilities 70,806 76,032 75,070
Derivative liabilities 21,095 29,170 25,141 Commercial paper and other short-term borrowings 177,753 190,856 159,542 Accrued expenses and other liabilities (includes $507, $507 and $376 of reserve for
unfunded lending commitments) 55,038 64,528 49,065 Long-term debt 206,605 202,800 169,317
Total liabilities 1,554,184 1,580,193 1,398,608
Shareholders' equity
Preferred stock, $0.01 par value; authorized - 100,000,000 shares; issued and outstanding - 7,602,067, 7,325,067 and 121,739 shares 24,151 17,306 2,851
Common stock and additional paid-in capital, $0.01 par value; authorized - 7,500,000,000 shares; issued and outstanding - 4,452,947,217, 4,452,810,412 and 4,436,935,963 shares 61,109 61,080 60,349
Retained earnings 79,920 79,554 83,223
Accumulated other comprehensive income (loss) (1,864) (884) (9,957)
Other (625) (747) (715)
Total shareholders' equity 162,691 156,309 135,751
Total liabilities and shareholders' equity $1,716,875 $1,736,502 $1,534,359
Certain prior period amounts have been reclassified to conform to current period presentation.
June 302008
June 302007
March 312008
17
Diluted Earnings Per Share – Annual
$2.24 $2.26 $2.30$3.05
$3.55$4.04
$4.59
$3.30
0.26 0.29 0.39
0.110.07
0.11
0.06
$3.64
1999 2000 2001 2002 2003 2004 2005 2006 2007
Reported Diluted EPS Merger & restructuring
$2.50$2.55 $2.69
$3.05
$3.55$3.75
$4.11$4.70
$3.36
Earnings Per Share
1.071.19 1.18 1.16 1.16
1.28
0.82
0.050.23
0.72
0.01
0.03 0.04 0.03 0.01
0.01
0.01
0.02
0.02
0.03
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Reported Diluted EPS Merger & restructuring
$1.08
$1.22 $1.22 $1.19 $1.17$1.29
$083
$0.07
Diluted Earnings Per Share – Quarterly
$.25
$.75
18
Dividend Per Share and Payout Ratio
$0.64$0.64$0.64$0.64
$0.56 $0.56$0.56
$0.50 $0.50$0.56
48.9%48.3%51.8%
71.4%
101.6%134.7%
46.7% 46.0%45.0% 46.5%
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q080%
20%
40%
60%
80%
100%
120%
140%
160%
Dividends Per Share Dividend Payout Ratio
(1) Excludes merger and restructuring charges and business exit costs. Dividend payout ratio is calculated on a trailing twelve month basis.
Dividends Per Share & Payout Ratio – Quarterly (1)
Dividends Per Share & Payout Ratio – Annual (1)
$0.93 $1.03 $1.14 $1.22
$1.90$2.12
$2.40
$1.44$1.70
38.8%43.0%
48.4%45.0% 45.8% 44.6%
71.4%
38.6% 39.8%
$0.00
$0.30
$0.60
$0.90
$1.20
$1.50
$1.80
$2.10
$2.40
$2.70
1999 2000 2001 2002 2003 2004 2005 2006 20070%
10%
20%
30%
40%
50%
60%
70%
80%
Dividends Per Share Dividend Payout Ratio
19
Return on Equity
16.8% 16.7%
11.3%
17.0%
21.5%
17.7%16.7%
18.0%
20.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007
(1) Excludes merger and restructuring charges and business exit costs
Return on Equity – Annual (1)
11.2%
0.9%
3.2%
9.6%
17.7%16.4%
15.6%17.7% 17.2%
16.2%
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Return on Equity – Quarterly (1)
20
Return on Assets
0.30%
0.81%
0.08%
1.49%
0.94%
1.42%1.45%1.54% 1.48% 1.44%
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Return on Assets – Quarterly (1)
(1) Excludes merger and restructuring charges and business exit costs
1.48%
0.95%
1.44%1.34%
1.17%
1.36%1.46% 1.37% 1.32%
1999 2000 2001 2002 2003 2004 2005 2006 2007
Return on Assets – Annual (1)
21
$ in Millions
$31,886
$37,989
$26,438
$22,729
$18,270
$15,504$16,338$14,607$14,419
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1999 2000 2001 2002 2003 2004 2005 2006 2007
Total noninterest income
$ in Millions
Noninterest Income – Annual
1999 2000 2001 2002 2003 2004 2005 2006 2007
Service charges 4,340 4,543 4,943 5,276 5,618 6,989 7,704 8,224 8,908 Card income 2,006 2,229 2,422 2,620 3,052 4,592 5,753 14,290 14,077 Mortgage banking 648 512 593 761 1,922 414 805 541 902 Investment & brokerage 1,748 1,929 2,112 2,237 2,371 3,614 4,184 4,456 5,147 Investment banking 1,411 1,512 1,579 1,545 1,736 1,886 1,856 2,317 2,345 Trading 1,605 1,923 1,842 778 408 869 1,763 3,166 (5,131) Gains (losses) on sales of debt securities 240 25 475 630 941 1,724 1,084 (443) 180Other income 2,421 1,934 2,372 1,657 2,222 2,641 3,289 5,438 5,458 Total noninterest income 14,419 14,607 16,338 15,504 18,270 22,729 26,438 37,989 31,886 % of Total Revenue 44% 44% 45% 44% 47% 45% 46% 52% 48%
22
$9,694
$7,012
$3,564
$7,383
$11,236
$9,887$9,887$9,598$9,589$8,915
0
2,000
4,000
6,000
8,000
10,000
12,000
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Total noninterest income
Noninterest Income – Quarterly
$ in Millions
$ in Millions 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
Service charges 1,901 2,077 2,147 2,099 2,072 2,200 2,221 2,415 2,397 2,638C ard income 3,404 3,664 3,473 3,719 3,333 3,558 3,595 3,591 3,639 3,451Mortgage banking 137 89 189 126 213 148 155 386 451 439Investment & brokerage 1,103 1,146 1,085 1,122 1,149 1,193 1,378 1,427 1,340 1,322Investment banking 501 612 510 694 638 774 389 544 476 695Trading 1,060 915 731 460 872 949 (1,388) (5,380) (1,783) 357G ains (losses) on sales of debt securities 14 (9) (469) 21 62 2 7 109 225 127O ther income 795 1,095 1,932 1,646 1,548 2,412 1,026 472 267 665 Total noninterest income 8,915 9,589 9,598 9,887 9,887 11,236 7,383 3,564 7,012 9,694 % of T otal Revenue 50% 53% 53% 53% 55% 57% 46% 28% 41% 48%
20082006 2007
23
51%
12%5%
18%
15%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1999 2000 2001 2002 2003 2004 2005 2006 2007
Personnel Occupancy & Equipment Intangibles Amort.
Mktg., Prof., D.P., Tele. Other Expenses
Noninterest Expense – Annual
$ in Millions
$ in Millions1999 2000 2001 2002 2003 2004 2005 2006 2007
Personnel 9,308$ 9,400$ 9,829$ 9,682$ 10,446$ 13,435$ 15,054$ 18,211$ 18,753$ Occupancy 1,627 1,682 1,774 1,780 2,006 2,379 2,588 2,826 3,038 Equipment 1,346 1,173 1,115 1,124 1,052 1,214 1,199 1,329 1,391
Total Occup. & Equip. 2,973 2,855 2,889 2,904 3,058 3,593 3,787 4,155 4,429 Intangibles Amort. 888 864 878 218 217 664 809 1,755 1,676 Marketing 537 621 682 753 985 1,349 1,255 2,336 2,356 Professional Fees 630 452 564 525 844 836 930 1,078 1,174 Data Processing 763 667 776 1,017 1,104 1,330 1,487 1,732 1,962 Telecommunications 549 527 484 481 571 730 827 945 1,013 Total Mktg., Prof. D.P., 2,479 2,267 2,506 2,776 3,504 4,245 4,499 6,091 6,505 & TelecommunicationsOther Operating Expense 2,338 2,697 3,302 2,856 2,930 4,457 4,120 5,909 7,038 Total Operating Expense 17,986$ 18,083$ 19,404$ 18,436$ 20,155$ 26,394$ 28,269$ 34,792$ 36,600$
Efficiency Ratio 55.3% 54.4% 55.5% 51.8% 52.4% 53.1% 49.7% 47.1% 53.8%
Merger and restructuring charges 618$ 412$ 805$ 410$
Annual
Operating basis. Fully taxable equivalent
24
47%
13%5%
19%
16%
0
2,000
4,000
6,000
8,000
10,000
12,000
3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Personnel Occupancy & Equipment Intangibles Amort.
Mktg., Prof., D.P., Tele. Other Expenses
Noninterest Expense – Quarterly
$ in Millions
$ in Millions 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
Personnel 4,813 4,480 4,474 4,444 5,025 4,737 4,169 4,822 4,726 4,420
O ccupancy 701 703 696 726 713 744 754 827 849 848
Equipment 344 316 318 351 350 332 336 373 396 372
T otal occ. & equip. 1,045 1,019 1,014 1,077 1,063 1,076 1,090 1,200 1,245 1,220
Intangibles amortization 440 441 441 433 389 391 429 467 446 447
Marketing 575 551 587 623 555 537 552 712 637 571
Professional fees 218 233 259 368 229 283 258 404 285 362
Data processing 410 409 426 487 437 472 463 590 563 587
Telecommunications 220 228 237 260 251 244 255 263 260 266
Total Mktg., P rof., D.P .& tele. 1,423 1,421 1,509 1,738 1,472 1,536 1,528 1,969 1,745 1,786
O ther operating expense 1,105 1,162 1,156 1,157 1,037 1,340 1,314 1,736 863 1,479
T otal operating expenses 8,826 8,523 8,594 8,849 8,986 9,080 8,530 10,194 9,025 9,352
E fficiency Ratio(1) 50.4% 46.0% 46.5% 47.0% 48.6% 45.4% 52.1% 76.2% 52.2% 45.3%
Merger and restructuring charges 98$ 194$ 269$ 244$ 111$ 75$ 84$ 140$ 170$ 212$
(1) O perating Basis. Fully taxable-equivalent.
20082006 2007
25
$18,342 $18,671$20,633
$21,511 $21,149
$28,677
$36,182
$35,815
$31,569
3.80%
3.42%3.20%
3.68% 3.75%
3.26%3.17%
2.84%
2.60%
3.96%
3.75%3.93%
2.82%
3.45%
1999 2000 2001 2002 2003 2004 2005 2006 2007
Net interest income (FTE) Net interest yield (Ex-Trading) Net interest yield
Net Interest Income and Net Interest Yields – Annual
$ in Millions
Balance Sheet Ratios
1999 2000 2001 2002 2003 2004 2005 2006 2007L iquidity R atiosLoans & leases / deposits 106% 111% 117% 101% 96% 95% 100% 111% 126%Loans & leases / earning assets 68% 67% 65% 59% 55% 52% 48% 51% 56%Total securities / earning assets 15% 14% 11% 13% 11% 17% 20% 20% 13%Market based assets / earning assets 29% 29% 30%Interest R ates and Y ieldsLoan & lease yield 7.63% 8.15% 7.50% 6.58% 6.04% 5.95% 6.50% 7.43% 7.25%Securities yield 6.00% 6.07% 6.23% 5.44% 4.44% 4.88% 5.03% 5.26% 5.37%E arning assets yield 7.04% 7.45% 6.90% 5.71% 4.90% 4.82% 5.35% 6.29% 6.41%Interest-bearing deposit rate 3.56% 4.20% 3.35% 2.07% 1.59% 1.48% 2.08% 2.92% 3.33%Interest-bearing liabilities rate 4.32% 5.09% 3.94% 2.42% 2.01% 1.98% 2.97% 3.99% 4.33%
Net interest yield 3.45% 3.20% 3.68% 3.75% 3.26% 3.17% 2.84% 2.82% 2.60%
26
$8,784 $10,291$8,597$8,894$8,926$9,040 $10,937$8,992 $9,815$8,955
2.85%2.73%
2.61% 2.59% 2.61%2.73%
3.93%3.82%
3.50%3.38%
3.28% 3.25%3.41%
2.61%2.92%2.98%
2.75%
3.56%3.78%
3.67%
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Net interest income (FTE) Net interest yield NIY Ex-Trading
Net Interest Income and Net Interest Yields – Quarterly
Balance Sheet Ratios based on Quarterly Average Balances
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
L iquidity Ratios
Loans & leases / domestic deposits 104% 114% 115% 117% 121% 128% 130% 130% 129% 128%
Loans & leases / earning assets 50% 51% 52% 53% 56% 57% 57% 58% 58% 59%
T otal securities / earning assets 17% 19% 18% 15% 14% 13% 13% 14% 15% 16%
Market based assets/ earning assets 28% 29% 29% 31% 29% 30% 30% 27% 27% 25%
Interest Rates and Y ields
Loan & lease yield 7.32% 7.47% 7.90% 7.42% 7.31% 7.26% 7.25% 7.21% 6.64% 6.04%
Securities yield 5.19% 5.34% 5.31% 5.17% 5.27% 5.39% 5.45% 5.40% 5.17% 5.04%
E arning assets yield 6.08% 6.26% 6.41% 6.39% 6.37% 6.38% 6.48% 6.39% 5.89% 5.44%
Interest-bearing deposit rate 2.53% 2.85% 3.15% 3.13% 3.19% 3.27% 3.39% 3.44% 3.04% 2.38%
Interest-bearing liabilities rate 3.60% 3.92% 4.23% 4.19% 4.31% 4.34% 4.43% 4.25% 3.55% 2.87%
Net interest yield 2.98% 2.85% 2.73% 2.75% 2.61% 2.59% 2.61% 2.61% 2.73% 2.92%
20082006 2007
27
Quarterly Average Balance and Rates and Yields Table*
(Dollars in millions)
Interest Interest InterestAverage Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/Balance Expense Rate Balance Expense Rate Balance Expense Rate
Earning assetsTime deposits placed and other short-term investments $10,310 $87 3.40 % $10,596 $94 3.56 % $15,310 $188 4.92 %Federal funds sold and securities purchased under agreements to resell 126,169 800 2.54 145,043 1,208 3.34 166,258 2,156 5.19Trading account assets 184,547 2,282 4.95 192,410 2,417 5.04 188,287 2,364 5.03Debt securities (1) 235,369 2,963 5.04 219,377 2,835 5.17 177,834 2,394 5.39Loans and leases (2):
Residential mortgage 256,164 3,541 5.54 270,541 3,837 5.68 260,099 3,708 5.70Credit card - domestic 61,655 1,603 10.45 63,277 1,774 11.28 56,235 1,777 12.67Credit card - foreign 16,566 512 12.43 15,241 474 12.51 11,946 350 11.76Home equity 120,265 1,627 5.44 116,562 1,872 6.46 94,267 1,779 7.57
Direct/Indirect consumer (3) 82,593 1,731 8.43 78,705 1,699 8.68 67,927 1,441 8.51Other consumer (4) 3,953 84 8.36 4,049 87 8.61 4,401 100 9.16
Total consumer 541,196 9,098 6.75 548,375 9,743 7.13 494,875 9,155 7.41Commercial - domestic 219,537 2,762 5.06 212,394 3,198 6.06 166,529 3,039 7.32Commercial real estate (5) 62,810 737 4.72 62,202 887 5.74 36,788 687 7.49Commercial lease financing 22,276 243 4.37 22,227 261 4.69 19,784 217 4.40Commercial - foreign 32,820 366 4.48 30,463 387 5.11 22,223 319 5.75
Total commercial 337,443 4,108 4.89 327,286 4,733 5.81 245,324 4,262 6.97Total loans and leases 878,639 13,206 6.04 875,661 14,476 6.64 740,199 13,417 7.26
Other earning assets 65,200 1,005 6.19 67,208 1,129 6.75 70,311 1,108 6.31Total earning assets (6) 1,500,234 20,343 5.44 1,510,295 22,159 5.89 1,358,199 21,627 6.38
Cash and cash equivalents 33,799 33,949 33,689Other assets, less allowance for loan and lease losses 220,580 220,683 169,761
Total assets $1,754,613 $1,764,927 $1,561,649
Interest-bearing liabilities Domestic interest-bearing deposits:
Savings $33,164 $64 0.77 % $31,798 $50 0.63 % $33,039 $47 0.58 %NOW and money market deposit accounts 258,104 856 1.33 248,949 1,139 1.84 212,330 987 1.86Consumer CDs and IRAs 178,828 1,646 3.70 188,005 2,071 4.43 161,703 1,857 4.61Negotiable CDs, public funds and other time deposits 24,216 195 3.25 32,201 320 4.00 16,256 191 4.70
Total domestic interest-bearing deposits 494,312 2,761 2.25 500,953 3,580 2.87 423,328 3,082 2.92Foreign interest-bearing deposits:
Banks located in foreign countries 33,777 272 3.25 39,196 400 4.10 41,940 522 4.99Governments and official institutions 11,789 77 2.62 14,650 132 3.62 17,868 224 5.02Time, savings and other 55,403 410 2.97 53,064 476 3.61 40,335 433 4.31
Total foreign interest-bearing deposits 100,969 759 3.02 106,910 1,008 3.79 100,143 1,179 4.72Total interest-bearing deposits 595,281 3,520 2.38 607,863 4,588 3.04 523,471 4,261 3.27
Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings 444,578 3,087 2.79 452,854 4,142 3.68 419,260 5,534 5.29Trading account liabilities 70,546 749 4.27 82,432 840 4.10 85,550 821 3.85Long-term debt 205,194 2,050 4.00 198,463 2,298 4.63 158,500 2,227 5.62
Total interest-bearing liabilities (6) 1,315,599 9,406 2.87 1,341,612 11,868 3.55 1,186,781 12,843 4.34Noninterest-bearing sources:
Noninterest-bearing deposits 190,721 179,760 173,564Other liabilities 86,865 88,827 67,753Shareholders' equity 161,428 154,728 133,551
Total liabilities and shareholders' equity $1,754,613 $1,764,927 $1,561,649Net interest spread 2.57 % 2.34 % 2.04 %Impact of noninterest-bearing sources 0.35 0.39 0.55
Net interest income/yield on earning assets $10,937 2.92 % $10,291 2.73 % $8,784 2.59 %
(1) Yields on AFS debt securities are calculated based on fair value rather than historical cost balances. The use of fair value does not have a material impact on net interest yield.(2) Nonperforming loans are included in the respective average loan balances. Income on these nonperforming loans is recognized on a cash basis.(3) Includes foreign consumer loans of $3.0 billion and $3.3 billion in the second and first quarters of 2008, and $3.9 billion in the second quarter of 2007.(4) Includes consumer finance loans of $2.8 billion and $3.0 billion in the second and first quarters of 2008, and $3.4 billion in the second quarter of 2007; and other foreign consumer loans of $862 million and $857 million in the second and first quarters of 2008, and $775 million in the second quarter of 2007.(5) Includes domestic commercial real estate loans of $61.6 billion and $61.0 billion in the second and first quarters of 2008, and $36.2 billion in the second quarter of 2007.(6) Interest income includes the impact of interest rate risk management contracts, which decreased interest income on the underlying assets $104 million and $103 million in the second and first quarters of 2008, and $117 million in the second quarter of 2007. Interest expense includes the impact of interest rate risk management contracts, which increased interest expense on the underlying liabilities $37 million and $49 million in the second and first quarters of 2008, and $207 million in the second quarter of 2007.
* Fully Taxable Equivalent BasisCertain prior period amounts have been reclassified to conform to current period presentation.
First Quarter 2008 Second Quarter 2007Second Quarter 2008
28
Loan Portfolio
(Dollars in millions)J une 30 March 31 Increase
2008 2008 (Decrease)C onsumer
Residential mortgage $235,472 $266,145 $(30,673)C redit card - domestic 62,081 60,393 1,688 C redit card - foreign 16,561 15,518 1,043 Home equity 121,409 118,381 3,028 Direct/Indirect consumer
(1) 84,907 80,219 4,688 O ther consumer
(2) 3,859 3,973 (114) T otal consumer 524,289 544,629 (20,340)
C ommercial
C ommercial - domestic (3) 220,610 208,212 12,398
C ommercial real estate (4) 62,897 62,739 158
C ommercial lease financing 22,815 22,132 683 C ommercial - foreign 34,839 31,101 3,738
T otal commercial loans measured at historical cost 341,161 324,184 16,977 C ommercial loans measured at fair value
(5) 5,014 5,057 (43)
T otal commercial 346,175 329,241 16,934 T otal loans and leases 870,464 873,870 (3,406)
(1) Includes foreign consumer loans of $2.9 billion and $3.2 billion at June 30, 2008 and March 31, 2008.(2) Includes consumer finance loans of $2.8 billion and $2.9 billion, and other foreign consumer loans of $839 million and $841 million at June 30, 2008 and March 31, 2008.(3) Includes small business commercial - domestic loans of $19.9 billion and $20.1 billion at June 30, 2008 and March 31, 2008.(4) Includes domestic commercial real estate loans of $61.8 billion and $61.4 billion, and foreign commercial real estate loans of $1.1 billion and $1.3 billion at June 30, 2008 and March 31, 2008.(5) Certain commercial loans are measured at fair value in accordance with SFAS 159 and include commercial - domestic loans of $3.5 billion and $3.9 billion, commercial - foreign loans of $1.3 billion and $949 million, and commercial real estate loans of $176 million and $240 million at June 30, 2008 and March 31, 2008.
Certain prior period amounts have been reclassified to conform to current period presentation.
29
36%41%45%
60%74%
82%78%64%58%
58%
55%49%30%
21%
14%14%31%
37%
6%
5%6%4%
5%
4%8%
5%
5% 5%
0
2,000
4,000
6,000
1999 2000 2001 2002 2003 2004 2005 2006 2007
Total Commercial Total Consumer Foreclosed Properties Nonperforming Securities
Nonperforming Assets$ in Millions
$ in Millions 1999 2000 2001 2002 2003 2004 2005 2006 2007
Commercial -Domestic (2) 1,163$ 2,777$ 3,123$ 2,781$ 1,388$ 855$ 581$ 584$ 869$ Commercial - Foreign 486 486 461 1,359 578 267 34 13 19 Commercial Real Estate 191 236 240 161 142 87 49 118 1,099 Commercial Real Estate - Foreign 3 3 3 3 Commercial lease financing 127 266 62 42 33
Small business commercial - domestic 135 Total Commercial 1,843 3,502 3,827 4,304 2,235 1,475 726 757 2,155
Residential Mortgages 529 551 556 612 531 554 570 660 1,999
Home Equity Lines (1) 46 32 80 66 43 66 117 249 1,340
Consumer Direct / Indirect (1) 19 19 27 30 28 33 37 44 8 Consumer Finance 598 1,095 9 19 32 Consumer Foreign 7 9 7 6 4 Other consumer 605 1,104 16 25 36 85 61 77 95
Total Consumer 1,199 1,706 679 733 638 738 785 1,030 3,442
Total Nonperforming Loans 3,042 5,208 4,506 5,037 2,873 2,213 1,511 1,787 5,597 Foreclosed Properties 163 249 402 225 148 102 92 69 351 Nonperforming securities 140
Total Nonperforming Assets (3)(4) 3,205$ 5,457$ 4,908$ 5,262$ 3,021$ 2,455$ 1,603$ 1,856$ 5,948$
Nonperforming Assets/Total Assets (6) 0.51% 0.85% 0.79% 0.80% 0.42% 0.22% 0.12% 0.13% 0.35%Nonperforming Assets/Total Loans, leases and
foreclosed properties (6) 0.86% 1.39% 1.49% 1.53% 0.81% 0.47% 0.28% 0.26% 0.68%Allowance for Loan and lease Losses 6,828$ 6,838$ 6,875$ 6,358$ 6,163$ 8,626$ 8,045$ 9,016$ 11,588$ Allowance for loan and lease losses/Total loans
and leases measured at historical cost (6) 1.84% 1.74% 2.09% 1.85% 1.66% 1.65% 1.40% 1.28% 1.33%Allowance for loan and lease losses/Total nonperforming loans and leases measured at 224% 131% 153% 126% 215% 390% 532% 505% 207%
(1) Home equity nonperforming loan balances of $42 million at December 31, 2006 have been reclassified to home equity from direct/indirect to conform to the current period presentation. (2) Excludes small business commercial - domestic loans.(3) Balances do not include nonperforming loans held-for-sale included in other assets of $188 million, $93 million, $73 million, $94 million and $80 million at December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007, and December 31, 2006, respectively.(4) Balances do not include loans measured at fair value in accordance with SFAS 159. At December 31, 2007, September 30, 2007, June 30, 2007 and March 31, 2007 there were no nonperforming loans or loans past due 90 days or more and still accruing interest measured under fair value in accordance with SFAS 159.(5) Balances do not include loans held-for-sale past due 90 days or more and still accruing interest included in other assets of $79 million and $8 million at December 31, 2007 and September 30, 2007.(6) Ratios do not include loans measured at fair value in accordance with SFAS 159 of $4.59 billion, $4.53 billion, $3.61 billion and $3.86 billion at December 31, 2007, September 30, 2007, June 30, 2007 and March 31, 2007, respectively.(7) Criticized exposure and ratios exclude assets held-for-sale and exposure measured at fair value in accordance with SFAS 159. Including assets held-for-sale and commercial loans measured at fair value, the ratios would have been 4.77 percent, 3.65 percent, 2.25 percent and 2.41 percent at December 31, 2007, September 30, 2007, June 30, 2007 and March 31, 2007, respectively. Including assets held-for-sale, the ratio would have been 2.23 percent at December 31, 2006.
30
Nonperforming Assets$ in Millions
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2QC ommercial -Domestic (1) 631$ 606$ 544$ 584$ 501$ 392$ 638$ 852$ 980 1,079$ C ommercial - Foreign 43 54 36 13 29 17 16 19 54$ 48 C ommercial Real Estate 72 59 68 118 189 280 352 1,099 1,627 2,616 C ommercial Real Estate - ForeignC ommercial lease financing 53 43 35 42 21 27 29 33 44 40 Small business commercial - domestic 108 105 152 169 153
T otal C ommercial 799 762 683 757 740 824 1,140 2,155 2,874 3,936 Residential Mortgages 538 537 599 660 732 867 1,176 1,999 2,576 3,269 Home Equity Lines (8) 155 167 211 291 363 496 764 1,340 1,786 1,851 C onsumer Direct / Indirect (8) - 2 1 2 2 3 6 8 6 11 C onsumer FinanceC onsumer Foreign 92 99 86 O ther consumer 77 133 94 94 95 91 89
T otal C onsumer 785 805 897 1,030 1,230 1,460 2,040 3,442 4,459 5,220 T otal Nonperforming Loans 1,584 1,567 1,580 1,787 1,970 2,284 3,180 5,597 7,333 9,156
Foreclosed PropertiesNonperforming securities 96 74 76 69 89 108 192 351 494 593
T otal Nonperforming Assets (2)(3)(4) 1,680$ 1,641$ 1,656$ 1,856$ 2,059$ 2,392$ 3,372$ 5,948$ 7,827$ 9,749
Loans past due 90 days or more and still accruing (4, 5) 1,924$ 2,433$ 2,719$ 3,056$ 2,870$ 2,798$ 2,995$ 3,736$ 4,160$ 4,548 Nonperforming assets / T otal assets (6) 0.12% 0.11% 0.11% 0.13% 0.14% 0.16% 0.21% 0.35% 0.45% 0.57%Nonperforming assets / T otal loans, leases and foreclosed properties (6) 0.27% 0.25% 0.25% 0.26% 0.29% 0.32% 0.43% 0.68% 0.90% 1.13%
Allowance for credit lossesA llowance for loan and lease losses 9,067$ 9,080$ 8,872$ 9,016$ 8,732$ 9,060$ 9,535$ 11,588$ 14,891$ 17,130$ Reserve for unfunded lending commitments 395 395 388 397 374 376 392 518 507$ 507
T otal allowance for credit losses 9,462$ 9,475$ 9,260$ 9,413$ 9,106$ 9,436$ 9,927$ 12,106$ 15,398$ 17,637$ A llowance for loan and lease losses / T otal loans and leases measured at historical cost (6) 1.46% 1.36% 1.33% 1.28% 1.21% 1.20% 1.21% 1.33% 1.71% 1.98%Allowance for loan and lease losses / T otal nonperforming loans and leases measured at historical cost 572% 579% 562% 505% 443% 397% 300% 207% 203% 187%
C ommercial criticized exposure (7) 6,917$ 6,925$ 7,257$ 7,061$ 7,119$ 7,187$ 10,820$ 17,553$ 22,733$ 28,336$ C ommercial criticized exposure / C ommercial utilized exposu 2.27% 2.19% 2.29% 2.20% 2.24% 2.17% 3.05% 4.17% 5.15% 6.15%
(1) Excludes small business commercial - domestic loans.(2) Balances do not include nonperforming loans held-for-sale included in other assets of $388 million, $327 million, $188 million, $93 million and $73 million at J une 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and J une 30, 2007, respectively.(3) Balances do not include loans measured at fair value in accordance with SFAS 159. At J une 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and J une 30, 2007, there were no nonperforming loans measured at fair value in accordance with SFAS 159. At J une 30, 2008, there were $81 million of loans past due 90 days or more and still accruing interest measured at fair value in accordance with SFAS 159. At March 31, 2008, December 31, 2007, September 30, 2007 and J une 30, 2007, there were no loans past due 90 days or more and still accruing interest measured at fair value in accordance with SFAS 159. (4) Balances and ratios do not include nonperforming available-for-sale debt securities (at fair value) of $676 million, $789 million, $180 million, $24 million and $27 million at J une 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and J une 30, 2007, respectively. Including nonperforming available-for-sale debt securities (at fair value), nonperforming assets as a percentage of total assets would have been 0.61 percent, 0.50 percent, 0.36 percent, 0.22 percent and 0.16 percent at J une 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and J une 30, 2007, respectively.(5) Balances do not include loans held-for-sale past due 90 days or more and still accruing interest included in other assets of $32 million, $69 million, $79 million and $8 million at J une 30, 2008, March 31, 2008, December 31, 2007 and September 30, 2007, respectively.(6) Ratios do not include loans measured at fair value in accordance with SFAS 159 of $5.0 billion, $5.1 billion, $4.6 billion, $4.5 billion and $3.6 billion at J une 30, 2008,
March 31, 2008, December 31, 2007, September 30, 2007 and J une 30, 2007, respectively.
(7) C riticized exposure and ratios exclude assets held-for-sale and exposure measured at fair value in accordance with SFAS 159. Including assets held-for-sale and commercial
loans measured at fair value, the ratios would have been 6.61 percent, 6.12 percent, 4.77 percent, 3.65 percent and 2.25 percent at J une 30, 2008, March 31, 2008,
December 31, 2007, September 30, 2007 and J une 30, 2007, respectively.
(8) Home equity npnperforming loan balances of $42 million at December 31, 2006 have been reclassified into home equity from direct/indirect to conform to currenty period presentation.
Loans are classified as domestic or foreign based upon the domicile of the borrower.
C ertain prior period amounts have been reclassified to conform to current period presentation.
200820072006
31
$2,000$2,400
$4,244$3,697
$3,106 $3,113
$6,480
$4,539
$4,562
0.55%
1.16%
0.66%
0.85% 0.84%0.87%
0.61%
1.10%
0.70%
$1,000
$1,750
$2,500
$3,250
$4,000
$4,750
$5,500
$6,250
$7,000
1999 2000 2001 2002 2003 2004 2005 2006 2007
0.25%
0.50%
0.75%
1.00%
1.25%
Net charge-offs
Net charge-off ratio excl. $635 mm charge-offs related to business exits
Net charge-off ratio
Net Charge-offs$ in Millions
(Dollars in millions)1999 2000 2001 2002 2003 2004 2005 2006 2007
Commercial -Domestic (4) 0.51% 0.87% 1.46% 1.34% 0.68% 0.15% 0.13% 0.22% 0.09%Commercial - Foreign 0.49% 0.29% 0.78% 2.45% 2.36% 1.05% -0.39% -0.04%Commercial R/E 0.05% 0.16% 0.18% 0.20% -0.01% 0.01% 0.11%Commercial lease financing 1.23% 0.05% 1.13% -0.14% 0.01%Small business commercial - domestic 5.57% Total commercial 0.44% 0.68% 1.19% 1.33% 0.81% 0.20% 0.16% 0.13% 0.40%Residential Mortgages 0.04% 0.03% 0.03% 0.04% 0.03% 0.02% 0.02% 0.02% 0.02%Home Equity Lines 0.07% 0.10% 0.09% 0.11% 0.05% 0.04% 0.05% 0.07% 0.28%Credit Card Domestic 5.08% 3.29% 4.04% 5.11% 5.37% 5.31% 6.76% 4.85% 5.29%Credit Card Foreign 2.46% 3.06%Consumer Direct/Indirect 0.88% 0.78% 0.82% 0.69% 0.55% 0.55% 0.55% 1.14% 1.95%Consumer Finance 1.22% 1.09% 3.70% 2.42%Consumer Foreign 0.52% 0.13% 0.22% 0.25% Other consumer 1.22% 1.09% 3.70% 2.42% 2.89% 2.51% 3.99% 2.97% 6.54% Total consumer 0.68% 0.54% 1.14% 0.91% 0.91% 0.93% 1.26% 1.01% 1.07%
Total net charge-offs 0.55% 0.61% 1.16% 1.10% 0.87% 0.66% 0.85% 0.70% 0.84%
Managed Credit Card Loss Ratio 5.57% 4.66% 4.76% 5.28% 5.36% 5.63% 6.92% 3.90% 4.79%
(1) Net charge-off/loss ratios are calculated as held net charge-offs or managed net losses divided by average outstanding held or managed loans and leases
measured at historical cost during the period for each loan and lease category.
(2) Net charge-offs include the impact of SOP 03-3 which decreased net charge-offs on residential mortgage $2 million, home equity $8 million, direct/indirect
consumer $2 million, commercial - domestic $34 million, commercial real estate $27 million and commercial lease financing $2 million for the year ended
December 31, 2007. Net charge-offs include the impact of SOP 03-3 which decreased net charge-offs on credit card - domestic $99 million,
credit card - foreign $53 million, direct/indirect consumer $119 million and small business commercial - domestic $17 million for the year ended December 31, 2006.
Refer to Exhibit A on page 47 for a reconciliation of net charge-offs and net charge-off ratios to net charge-offs and net charge-off ratios excluding the impact of SOP 03-3.
(3) Historical ratios have been adjusted for home equity, direct/indirect consumer and other consumer due to the reclassification of home equity loan balances from direct/indirect consume
to home equity, and certain foreign consumer loans from other consumer to direct/indirect consumer.
(4) Excludes small business commercial - domestic loans.
Loans are classified as domestic or foreign based upon the domicile of the borrower.
Certain prior period amounts have been reclassified to conform to current period presentation.
Year-to-Date Net Charge-offs/Losses and Net Charge-off/Loss Ratios (1, 2, 3)
32
Net Charge-offsQ uarterly Net C harge-offs/Losses and Net C harge-off/Loss Ratios (1, 2)
(Dollars in millions)
Held Basis A mount Percent A mount Percent A mount Percent A mount Percent A mount Percent
Residential mortgage $151 0.24 % $66 0.10 % $27 0.04 % $13 0.02 % $11 0.02 %
C redit card - domestic 976 6.36 847 5.39 738 4.87 712 4.91 807 5.76
C redit card - foreign 132 3.21 109 2.87 108 2.99 96 3.19 86 2.88
Home equity 923 3.09 496 1.71 179 0.63 50 0.20 28 0.12
Direct/Indirect consumer 660 3.22 555 2.84 456 2.41 353 1.92 285 1.68
O ther consumer 83 8.47 86 8.61 96 9.08 78 7.18 56 5.14
T otal consumer 2,925 2.17 2,159 1.58 1,604 1.17 1,302 0.99 1,273 1.03
C ommercial - domestic (3) 70 0.14 77 0.16 64 0.13 11 0.03 29 0.08
C ommercial real estate 136 0.88 107 0.70 17 0.12 28 0.28 (1) (0.01)
C ommercial lease financing 6 0.11 15 0.27 17 0.31 (3) (0.07) (11) (0.21)
C ommercial - foreign 5 0.06 (7) (0.10) 2 0.03 (4) (0.06) 6 0.10
217 0.28 192 0.26 100 0.13 32 0.05 23 0.04
Small business commercial - domestic 477 9.53 364 7.31 281 5.82 239 5.38 199 4.80
T otal commercial 694 0.84 556 0.69 381 0.47 271 0.42 222 0.37
T otal net charge-offs $3,619 1.67 $2,715 1.25 $1,985 0.91 $1,573 0.80 $1,495 0.81
By Business Segment
G lobal C onsumer and Small Business Banking $4,721 5.16 % $3,693 4.09 % $3,033 3.41 % $2,687 3.21 % $2,662 3.37 %
G lobal C orporate and Investment Banking 318 0.39 328 0.41 214 0.26 114 0.17 74 0.12
G lobal W ealth and Investment Management 92 0.42 52 0.24 28 0.13 16 0.08 4 0.03
A ll O ther (4) (1,512) (6.89) (1,358) (5.34) (1,290) (4.81) (1,244) (4.74) (1,245) (4.94)
T otal net charge-offs $3,619 1.67 $2,715 1.25 $1,985 0.91 $1,573 0.80 $1,495 0.81
Supplemental managed basis data
C redit card - domestic $2,414 6.36 % $2,068 5.48 % $1,816 4.90 % $1,707 4.76 % $1,786 5.17 %
C redit card - foreign 337 4.11 304 3.84 322 4.06 317 4.24 313 4.31
T otal credit card managed net losses $2,751 5.96 $2,372 5.19 $2,138 4.75 $2,024 4.67 $2,099 5.02
T otal commercial managed net losses $694 0.84 % $556 0.69 % $381 0.47 % $271 0.42 % $222 0.37 %
T otal managed net losses 5,268 2.15 4,140 1.69 3,306 1.34 2,839 1.27 2,766 1.31
(3) Excludes small business commercial - domestic loans.(4) G lobal C onsumer and Small Business Banking is presented on a managed basis, specifically C ard Services. The securitization offset is included within A ll O ther. Loans are classified as domestic or foreign based upon the domicile of the borrower.
C ertain prior period amounts have been reclassified to conform to current period presentation.
(1) Net charge-off/loss ratios are calculated as annualized held net charge-offs or managed net losses divided by average outstanding held or managed loans and leases measured at historical cost during the period for each loan and lease category.
(2) Net charge-offs include the impact of SO P 03-3 which decreased net charge-offs on residential mortgage $3 million, home equity mortgage $2 million, home equity $3 million, commercial - domestic $4 million, commercial - domestic $3 million, commercial realestate $8 million and small business commercial - domestic $2 million for the three months ended J une 30, 2008; on residential $3 million, commercial real estate $8 million and small business commercial - domestic $3 million for the three months ended March 31, 2008; and on residential mortgage $2 million, home equity $8 million, direct/indirect consumer $2 million, commercial - domestic $29 million, commercial real estate $27 million, commercial lease financing $2 million and small business commercial - domestic $5 million for the three months ended December 31, 2007. The impact of SO P 03-3 was not material for the three months ended September 30, 2007 and J une 30, 2007.for a reconciliation of net charge-offs and net charge-off ratios to the net charge-offs and net charge-off ratios excluding the impact of SO P 03-3.
SecondQ uarter
2008 2007Q uarter
F irst SecondFourth T hird
2007Q uarter
2007Q uarter
2008Q uarter
33
Performance by Geographical Area
Since the Corporation’s operations are highly integrated, certain asset, liability, income and expense amounts must be allocated to arrive at total assets, total revenue, net of interest expense, income before income taxes and net income by geographic area. The Corporation identifies its geographic performance based upon the business unit structure used to manage the capital or expense deployed in the region as applicable. This requires certain judgments related to the allocation of revenue so that revenue can be appropriately matched with the related expense or capital deployed in the region.
At December 31 Year Ended December 31
(Dollars in millions) Year Total assets (1)
Total revenue, net of interest expense (2)
Income before
income taxes Net income
Domestic (3) 2007 $1,529,899 $59,731 $18,039 $13,137
2006 1,312,912 64,381 28,041 18,605
2005 52,944 21,880 14,778
Asia 2007 46,359 1,613 1,146 721
2006 32,886 1,117 637 420
2005 909 521 344
Europe, Middle East and Africa 2007 129,303 4,097 894 592
2006 100,928 4,835 1,843 1,193
2005 1,783 920 603
Latin America and the Caribbean 2007 10,185 878 845 532
2006 13,011 2,247 1,452 915
2005 1,539 1,159 740
Total Foreign 2007 185,847 6,588 2,885 1,845
2006 146,825 8,199 3,932 2,528
2005 4,231 2,600 1,687
Total Consolidated 2007 $1,715,746 $66,319 $20,924 $14,982
2006 1,459,737 72,580 31,973 21,133
2005 57,175 24,480 16,465
(1) Total assets include long-lived assets, which are primarily located in the U.S. (2) There were no material intercompany revenues between geographic regions for any of the periods presented. (3) Includes the Corporation's Canadian operations, which had total assets of $10.9 billion and $6.8 billion at December 31, 2007 and 2006; total
revenue, net of interest expense of $770 million, $636 million and $118 million; income before income taxes of $292 million, $269 million and $73 million; and net income of $195 million, $182 million and $61 million for the years ended December 31, 2007, 2006 and 2005, respectively.
34
$83.17$91.11 $94.11 $93.90
$101.54
$129.43 $127.84 $133.60 $135.27 $134.86 $135.75
$156.31
$94.98$91.06$88.09$84.98
$83.37
$138.51
$162.69$146.80
8.45%
7.51%
6.87%
8.52%8.57%8.64%8.48%8.33%
8.25%
8.22%
0
20
40
60
80
100
120
140
160
180
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Tier 1 Capital Ending Equity Tier 1 Capital Ratio
Capital Levels
$ in Millions
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
Ending Equity 129,426$ 127,841$ 133,597$ 135,272$ 134,856$ 135,751$ 138,510$ 146,803$ 156,309$ 162,691$ T rust Preferred Securities 14,428 15,521 15,868 15,942 16,600 16,884 16,916 16,863 16,863 16,873 Ending C apital 143,854 143,362 149,465 151,214 151,456 152,635 155,426 163,666 173,172 179,564 Goodwill & Intangibles 76,952 76,433 75,576 75,084 74,913 74,565 77,068 87,826 87,692 87,273 Ending Tangible C apital 66,902 66,929 73,889 76,130 76,543 78,070 78,358 75,840 85,480 92,291 Ending A ssets 1,375,080 1,445,193 1,449,211 1,459,737 1,502,157 1,534,359 1,578,763 1,715,746 1,736,502 1,716,875 T ier 1 C apital 83,174 84,978 88,085 91,065 91,112 94,979 94,108 83,372 93,899 101,541 R isk-weighted A ssets 984,190 1,019,828 1,039,283 1,054,533 1,062,883 1,115,150 1,145,069 1,212,905 1,250,942 1,230,421 EO P O utstanding shares 4,581 4,528 4,498 4,458 4,439 4,437 4,437 4,438 4,453 4,453
Tang. Equity/ Tang. A ssets 4.0% 3.8% 4.2% 4.4% 4.2% 4.2% 4.1% 3.6% 4.2% 4.6%C apital / A ssets 10.5% 9.9% 10.3% 10.4% 10.1% 9.9% 9.8% 9.5% 10.0% 10.5%Equity / A ssets 9.4% 8.9% 9.2% 9.3% 9.0% 8.9% 8.8% 8.6% 9.0% 9.5%Tier 1 C apital Ratio 8.5% 8.3% 8.5% 8.6% 8.6% 8.5% 8.2% 6.9% 7.5% 8.3%
20082006 2007
35
FTE basis; excludes merger & restructuring charges
Efficiency Ratio
2005
50%
54%
52%
53%
2000 2001 2002 2003 2004
47%
2006
50% target
54%
52%
54%
2007
Efficiency Ratio = non-interest expense/(net interest income + non-interest income)
48%
YTD 2008
36
$2.40
1977 2007
13% annualized growth
Dividend Yield (1)
8.86%
Dividend Record
(1) Yield based on annualized dividend and price as of 08/13/08
• Current dividend rate of $.64 per share ($2.56 annually)
37
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
1H08
Cum
ulat
ive
Dividends Repurchases
$98,442
Capital returned as a % of earnings 58% 88% 84% 96% 89% 91% 63% 63% 91% 81% 82%
Capital Returned to Shareholders
Tier 1
7.06%
Tier 1
8.25%
$ in Millions
• Including net share repurchases and dividends, returned more than $98 billion in capital since 1998
•Since 1998, net share repurchases plus dividends have averaged 80% of net income.
132%
38
Total Return to Shareholders
TSR is the annualized total shareholder return including dividends
As of June 30, 2008
(47.4%)
(25.4%)
(15.0%)(8.9%)
(5.2%)(0.6%)
8.5%
1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 10 Yr 15 Yr
Bank of America S & P 500 Index Bank Index Dow
39
Debt Ratings
•Bank of America common stock is listed on The New York Stock Exchange, Inc. and The Pacific Stock Exchange Incorporated under the symbol “BAC”. The common stock is also listed on the London Stock Exchange, and certain shares of common stock are listed on the Tokyo Stock Exchange. The stock is typically listed in the Wall Street Journal as BankAm.
•Bank of America and certain of its banking subsidiaries also have debt securities issued in the marketplace. The corporation and its primary bank’s debt ratings are:
Credit Rating SummaryUpdated as of July 16, 2008
Bank of America CorporationFitch Moody's Standard & Poor's
Outlook Stable Negative NegativeIssuer -- Aa2 AALong-Term (Senior) A+ Aa2 AALong-Term (Subordinated) A Aa3 AA-Short-Term (CP) F1+ P-1 A-1+Preferred Stock A A1 A+Trust Preferred A Aa3 A+
Bank of America, N.A. Fitch Moody's Standard & Poor's
Outlook Stable Stable NegativeLong-Term AA- Aaa AA+Short-Term F1+ P-1 A-1+
BFSR N/A A- (Negative Outlook) N/A
*Long-term Deposits/Long-term Senior Debt
Bank of America Business Segments
41
Business Segment Revenue
Global Consumer & Small Business
Banking42%
Global Wealth & Investment
Management17%
Global Corporate & Investment Bank
40%
All Other1%
Net Income First Half 2008
Global Wealth & Investment Banking
11% Global Consumer & Small Business
Banking70%
Global Corporate & Investment Bank
24%
All Other-5%
Revenue* First Half 2008
*Fully taxable-equivalent basis. Global Consumer and Small Business Banking is presented on a managed basis, specifically Card Services, with a corresponding offset to all other.
42
Recent Events and Line of Business Financial Performance Highlights
2008 Economic Environment and Current Business Environment
The slowing economy and declining housing prices continued to negatively affect our home equity and residential mortgage portfolios, as well as other areas of our consumer portfolio. In addition, we have seen sustained stress in the credit quality of our small business and commercial homebuilder portfolios. These factors have driven increases in consumer and commercial net charge-offs and nonperforming assets as well as higher commercial criticized utilized exposure and reserve increases across most portfolios during the first half of 2008.
The market dislocations that have been experienced in the financial markets over the past year continue to impact our results although to a lesser extent in the second quarter of 2008. We have incurred additional losses on CDOs and related subprime exposure (CDO exposure) and continue to reduce our exposure to these vehicles.
The market illiquidity continued to impact the credit ratings of certain structured investment vehicles (SIVs). During the first half of 2008, we provided additional support to certain cash funds managed within GWIM by utilizing existing capital commitments and purchasing certain investments from these funds. Further, some of the SIVs that we have purchased or are held by these funds are expected to be restructured which may result in additional losses.
The subprime mortgage dislocation also impacted the ratings of certain monoline insurance providers (monolines), which has affected the pricing of certain municipal securities and the liquidity of the short-term public finance markets. We have direct and indirect exposure to monolines and, in certain situations, recognized losses related to some of these exposures during the first half of 2008.
The above conditions together with deterioration in the overall economy will continue to affect these and other markets in which we do business and will adversely impact our results throughout the remainder of 2008. The degree of the impact is dependent upon the duration and severity of the aforementioned conditions.
43
Recent Events and Line of Business Financial Performance Highlights
Other Recent Events
In July 2008, the Board of Directors (the Board) authorized a stock repurchase program of up to 75 million shares of the Corporation’s common stock at an aggregate cost not to exceed $3.75 billion and is limited to a period of 12 to 18 months. This stock repurchase program replaced the previous stock repurchase program that expired in July 2008.
In July 2008, the Board declared a regular quarterly cash dividend on common stock of $0.64 per share, payable on September 26, 2008 to common shareholders of record on September 5, 2008. In April 2008, the Board declared a regular quarterly cash dividend on common stock of $0.64 per share which was paid on June 27, 2008 to common shareholders of record on June 6, 2008. In June and July 2008, we declared aggregate dividends on preferred stock of $472 million, and in March and April 2008 declared aggregate dividends on preferred stock of $187 million.
On July 1, 2008, the Corporation acquired Countrywide through its merger with a subsidiary of the Corporation. Under the terms of the agreement, Countrywide shareholders received 0.1822 of a share of Bank of America Corporation common stock in exchange for one share of Countrywide common stock. The acquisition of Countrywide significantly improved our mortgage originating and servicing capabilities, while making us the nation’s leading mortgage originator and servicer.
In June 2008, we reached a definitive agreement to sell our equity prime brokerage business to BNP Paribas. The decision to sell the business is part of a strategic realignment within GCIB which reflects the decision to exit certain brokerage processing and balance sheet-intensive activities. We remain committed to our hedge fund clients in equities as well as across asset classes and investment banking. The completion of this transaction is subject to obtaining all regulatory approvals and is expected to close in the third quarter of 2008.
In May and June 2008, we issued 117 thousand shares of Bank of America Corporation 8.20% Non-Cumulative Preferred Stock, Series H (Series H Preferred Stock) with a par value of $0.01 per share for $2.9 billion. Further, in April 2008, we issued 160 thousand shares of Bank of America Corporation Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series M (Series M Preferred Stock) with a par value of $0.01 per share for $4.0 billion. The fixed rate is 8.125 percent through May 14, 2018 and then adjusts to three-month LIBOR plus 364 basis points (bps) thereafter.
44
Recent Events and Line of Business Financial Performance Highlights
Global Consumer and Small Business Banking
Three months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
Net income decreased $1.6 billion, or 66 percent, as increases in net interest income and noninterest income were more than offset by higher provision for credit losses and noninterest expense. Net interest income increased $906 million, or 13 percent, due to organic growth in average loans and leases, increased spreads and higher margin on ALM activities. Partially offsetting these increases was the impact of competitive deposit pricing. Noninterest income increased $365 million, or eight percent, mainly due to higher service charges and mortgage banking income. Provision for credit losses increased $3.5 billion, or 112 percent, driven by an increase of $2.1 billion and $1.2 billion in Consumer Real Estate and Card Services. Noninterest expense increased $383 million, or eight percent, largely due to the addition of LaSalle as well as higher deposit account and transaction volumes.
Six months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
Net income decreased $3.2 billion, or 63 percent, as increases in noninterest income of $1.7 billion and net interest income of$1.6 billion were more than offset by higher provision for credit losses of $7.5 billion and noninterest expense of $833 million. In addition to the factors described in the three-month discussion above, noninterest income and noninterest expense benefited from the favorable impact of the Visa IPO transactions.
Global Corporate and Investment Banking
Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
Net income increased $54 million, or three percent, to $1.7 billion as growth in net interest income and decrease in noninterest expense more than offset decreases in market-based noninterest income related to the CMAS business, including CDO-related writedowns, and a higher provision for credit losses. Net interest income increased $1.2 billion, or 47 percent, driven primarily by higher market-based net interest income which benefited from the decrease in the cost of market-based funding due to a decline in short-term interest rates and trading strategies. Additionally, net interest income benefited from growth in average loans and leases of $80.8 billion, or 32 percent, combined with a higher margin on ALM activities. These benefits were partially offset by the impact of competitive deposit pricing and a shift in the deposit product mix as more customers moved their deposits to higher yielding products. The growth in average loans and average deposits was due to the LaSalle merger as well as organic growth. Noninterest income decreased $1.2 billion, or 36 percent, driven by declines in trading account profits (losses) of $568 million and all other income (loss) of $736 million. For more information on the aforementioned decreases, see the CMAS discussion. The provision for credit losses increased $321 million to $363 million driven by higher credit costs in Business Lending. Noninterest expense decreased $426 million, or 13 percent, mainly due to a reduction in performance-based incentive compensation in CMAS partially offset by the addition of LaSalle.
Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
Net income decreased $1.3 billion, or 41 percent driven by lower noninterest income of $4.7 billion and an increase of $729 million in provision for credit losses. These items were partially offset by an increase in net interest income of $2.4 billion and a decrease of $940 million in noninterest expense. These period-over-period changes were driven by the same factors as described in the three-month discussion above, except that noninterest income and noninterest expense benefited from the favorable impact of the Visa IPO transactions.
45
Recent Events and Line of Business Financial Performance Highlights
Global Wealth and Investment Management
Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
Net income was relatively flat, as an increase in total revenue was offset by higher noninterest expense and provision for credit losses. Net interest income increased $184 million, or 19 percent, due to higher margin on ALM activities, the acquisitions of U.S. Trust Corporation and LaSalle, and growth in average deposit and loan balances. These increases were partially offset by spread compression driven by deposit mix and competitive deposit pricing. GWIM deposit growth benefited from the U.S. Trust Corporation and LaSalle acquisitions, the migration of customer relationships and related deposit balances from GCSBB, and organic growth. Noninterest income increased $206 million, or 22 percent, driven by higher investment and brokerage services income primarily attributable to the impact of the U.S. Trust Corporation and LaSalle acquisitions, partially offset by $36 million in losses related to the support provided to certain cash funds managed within Columbia. Provision for credit losses increased $132 million to $119 million as a result of increased reserves and higher net charge-offs due to the deterioration in the housing markets. Noninterest expense increased $248 million, or 25 percent, driven by the additions of U.S. Trust Corporation and LaSalle.
Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
Net income decreased $265 million, or 25 percent, as increases of $507 million in investment and brokerage services income and $260 million in net interest income were more than offset by increases of $589 million in noninterest expense and $353 million in provision for credit losses. These period-over-period changes were driven by the same factors as discussed in the three-month discussion above. In addition during 2008, losses of $256 million were recorded in all other income related to the support provided to certain cash funds managed within Columbia.
All Other
Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
Net income decreased $792 million to $279 million due to a decline in noninterest income combined with higher provision for credit losses and increased merger and restructuring charges. Noninterest income declined $692 million to $839 million due to a decrease in equity investment income of $1.0 billion due to a reduction in gains from our Principal Investing portfolio attributable to a lack of liquidity in the marketplace. This decrease included the absence of the $600 million increase in value during the second quarter of 2007 of private equity funds which were sold during July 2007. This decrease was partially offset by the increase in card income of $155 million driven by the difference between the funds transfer pricing allocations and the actual bond costs associated with our Card Services securitizations due to the rapid decrease in short-term interest rates over the past nine months. Provision for credit losses increased $498 million to $447 million primarily due to higher credit costs related to our ALM residential mortgage portfolio reflective of deterioration in the housing markets. Merger and restructuring charges increased $137 million to $212 million due to the integration costs associated with the LaSalle and U.S. Trust Corporation mergers. Restructuring Activity to the Consolidated Financial Statements. Income tax expense (benefit) decreased $595 million to $(11) million primarily due to lower pre-tax income and increased lowincome housing tax credits.
Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
Net income decreased $1.6 billion to $61 million primarily due to a decrease of $1.4 billion in noninterest income, combined with a higher provision for credit losses of $888 million and increased merger and restructuring charges of $196 million partially offset by a decrease of $690 million in income tax expense. These changes were due to the same factors as described in the three-month discussion above. In addition, All Other’s results were adversely impacted by the absence of earnings due to the sale of our Latin American operations in the first quarter of 2007.
46
Consumer and Small Business Bank
Global Consumer & Small Business Banking serves one out of two – almost 59 million – U.S. consumer and small business households. Bank of America customers enjoy unrivaled convenience: more banking centers and ATMs than any other bank, #1 online banking and bill pay services (we account for 65% of all bills paid online), and #1 mobile banking service with more customers than all other banks combined.
GCSBB has two powerful earnings engines: deposits and card services. Over time, the acquisition of Countrywide Financial will provide another powerful source of earnings, home lending. Our businesses continue to have momentum, and by investing in strategic opportunities, as well as leveraging award-winning innovation and unparalleled distribution, GCSBB will continue to grow organically, earning loyalty and deepening relationships with both new and existing customers.
• Core businesses:
– Deposits and Debit
– Card Services
– Consumer Real Estate and Insurance
– Small Business Banking
– e-Commerce/ATM
• Retail footprint
– 78 percent of the U.S. population lives and works within the retail footprint, which covers 32 states and the District of Columbia.
– Bank of America has significant shares in some of the most attractive markets in the U.S. At the same time, variability of market share leaves room to grow by tailoring strategy by market.
– Rebranding of the LaSalle franchise occurred May 5, with systems conversion on track.
• Distribution channels
– Bank of America offers customers the convenience of more than 6,100 banking centers, 18,500 domestic ATMs, and the leading Online Banking, Online Bill Pay and Mobile Banking services, as well as a world-class sales force and telephone banking team.
– GCSBB leverages this franchise to drive efficiencies and be a low-cost producer.
• Products
– Bank of America is the nation’s leading provider of checking and savings accounts, credit and debit cards, home equity lending and direct-to-consumer mortgages, and it has a leading Merchant Services business
– Since products and distribution are tightly integrated, GCSBB can adapt all services to meet the needs of consumers and businesses of any size
• Growth opportunities:
– Deposits and debit card
– Consumer lending
– Distribution network
– Mass affluent and small business segments
– Affinity banking
47
Checking35%
Traditional Savings
6%Money Market Savings
25%
CDs & I RAs33%
Foreign and Other1%
Deposits
•Deposits provide one of the primary entry points for new customers of Bank of America, and deposit balances provide a relatively stable source of funding and liquidity.
•Bank of America provides a comprehensive range of deposit products to consumers and small businesses. Products include:
– Regular and interest-checking accounts
– Traditional savings accounts
– Money market savings accounts
– CDs and IRAs
•Bank of America earns interest income from investing deposits in earning assets through client facing lending activity and our ALM activities. The revenue streams from these activities are allocated to deposit products using funds transfer pricing, which takes into account the interest rates and maturity characteristics of the deposits. Deposits also generate account fees such as account service fees, non-sufficient fund fees, overdraft charges and ATM fees, while debit cards generate merchant interchange fees based on purchase volume.
•Total average retail deposit balances increased more than $56 billion (compared to year ago), or 12% with approximately half coming from organic growth and the balance from the acquisition of LaSalle and U.S. Trust.
June 2008 Retail Average Deposit Balances
Note: Retail deposits also include balances from Business Banking and GWIM
Consumer and Small Business Bank
48
•YTD 2008 net interest income of $3.8 billion is down 19%. Deposits spread of 2.36% is down 68bps from 2007 as spread compression more than offset deposit growth.
•Added 1.2 million net new retail checking accounts for YTD 2008. These additions resulted from continued improvements in sales and service results in the Banking Center Channel and Online, and the success of products as Keep the ChangeTM and new Affinity relationships.
•Affinity Deposits, launched in second quarter of 2007, contributed 19% of new DDA account sales YTD 2008.
•Continued DDA growth, new initiatives, and the addition of LaSalle drove a 16% increase in Service Charges to $3.3 billion in 2008.
•Debit Card purchase volume YTD 2008 grew to $104 billion, a 15% increase over same period prior year, which resulted in Debit Card revenue of $1.2 billion, a 13% increase driven by DDA growth, an increase in usage, and the addition of LaSalle.
YTD Debit Purchase VolumeYTD Revenue
Deposits - continued
4.7 3.8
2.9 3.3
1.0 1.2
$0
$2
$4
$6
$8
$10
YTD 2007 YTD 2008
$ in
bill
ions
Debit Revenue Service Charges Net Interest Income
$81
$91
$104
$0
$40
$80
$120
2006 2007 2008
$ in
bill
ions
YTD
Consumer and Small Business Bank
49
Card Services Overview
•Card Services provides a broad offering of credit cards and unsecured lines of credit to consumers and small businesses. Our products include a variety of unique credit card reward programs as well as co-branded and affinity card products.
•Bank of America is the recognized leader in affinity marketing with more than 5,000 affinity partners worldwide, including the National Football league, Major League Baseball, NASCAR, Penn State University, AAA and the National Education Association
•Bank of America has the top market share position in credit card and unsecured lines of credit in the U.S. and is the number one credit card lender in Europe. Bank of America has international credit card operations in the Untied Kingdom, Ireland, Spain and Canada.
•Card Services continues its efforts to deepen customer relationships. In 2008, Card Services generated managed revenues of $14.2 billion and accounted for 23% of total Bank of America net income
•Card Services key business strategies include:
– Leverage Bank of America stores and Web site to maximize marketing opportunities
– Strengthen and optimize relationships with key partners
– Improve customer satisfaction and delight through retentions and activation strategies
– Increase growth in unsecured consumer lending business
•Card Services has market leadership:
– No. 1 affinity issuer in the U.S. with more than 5,000 endorsed groups
– No. 1 card issuer in the U.S. with $163 billion in managed loans
– No. 1 credit card lender in the United Kingdom with $30 billion in managed loans
•Card Services Business Lines:
– Card Services Business Lines
– Consumer Card
– Business Card
– Unsecured Lending
– International loan products
•Products / Services
– Broad offering of VISA/MasterCard/AMEX products
– Affinity products
– Total Security Protection
– Secured / unsecured lines of credit
Consumer and Small Business Bank
50
•Recent domestic achievements include:
– Credit Card contracts with 16 new Affinity Partners were completed and signed in 2Q. Significant signings include Virgin Atlantic Airways, University of Cincinnati, and University of California – San Diego Alumni
– Renewals completed in 2Q include Elite Rewards, the Atlanta Braves, University of Central Florida, Arbonne International, and the American Institute of Architects
•Recent international achievements include:
– Europe signed new card affinity deals with New Miles & More American Express Card, United Airlines, Royal College Nursing and ICICI Bank and renewed the relationship with Breakthrough For Breast Cancer for an additional five years.
– In addition, Europe Card Services has signed licensing agreements with Bank of America (USA), DnB NOR (Norway) and Bank Danamon (Indonesia) to issue the Liverpool Football Club credit card in their domestic markets. This will provide a royalty income stream for ECS while helping Liverpool to reinforce their global brand.
Key Card Services Data
Card Services Overview - continued
Consumer and Small Business Bank
Consumer Card 65.1%
Business Card5.9%
Unsecured Lending10.9%
International14.8%Other
3.3%
June 2008 YTD Card ServicesTotal Managed Revenue
(Dollars in millions; except as noted)
2008 2007
C ard Services Key IndicatorsManaged C ard - US C onsumer and Business C ard
G ross interest yield 11.43 % 12.82 %
Risk adjusted margin (1)6.14 7.71
Loss rates 6.16 5.01 A verage outstandings $162,197 $146,838Ending outstandings 163,315 148,746 New account growth (in thousands) 4,254 4,479 Purchase volumes $117,770 $116,703Delinquencies:
30 Day 5.88 % 5.29 %90 Day 3.03 2.68
Six Months EndedJ une 30
51
We evaluate our Card Services business on both a held and managed basis. Managed basis treats securitized loan receivables as if they were still on the balance sheet and presents the earnings on the sold loan receivables as if they were not sold. The receivables that have been securitized are subject to the same underwriting standards and ongoing monitoring as the held loans. The credit performance of the managed portfolio is important to understanding the results of card operations.
Key Card Services Data
Card Services Overview - continued
Consumer and Small Business Bank
$172,231
$196,431
$35,900
$39,194
$75,000
$105,000
$135,000
$165,000
$195,000
$225,000
$255,000
2007 YTD 2008 YTD
Ending Managed Card Services Loans(in millions)
Foreign Loans Domestic Loans
$193,057 $199,050
15.93%
14.39%
13.00%
13.80%
14.60%
15.40%
16.20%
17.00%
$150,000
$175,000
$200,000
$225,000
$250,000
2007 YTD 2008 YTD
Card Services Payment Volumes(in millions)
Payment Volume Payment Rate
$131,032 $134,891
$57,752 $62,718
$50,000
$90,000
$130,000
$170,000
$210,000
$250,000
$290,000
2007 YTD 2008 YTD
Card Services Retail & Cash Sales Volumes(in millions)
Cash Sales Volume Retail Sales Volume
Direct Mail20.8%
Event Marketing4.9%
Media Marketing6.2%
Point of Sale1.8%
eCommerce13.8%
Teleservices5.4%
Franchise24.4%
Alternate Other12.8%
Acquired Accounts
9.9%
June 2008 YTD Card Services Account Production by Channel
52
Consumer Real Estate and Insurance Overview
•On July 1, 2008 Bank of America Bank of America Corporation completed its purchase of Countrywide Financial Corp. to create the nation's leading mortgage originator and servicer.
•Barbara J. Desoer was named President of the newly combined Bank of America Mortgage, Home Equity and Insurance Services organization.
•The combined company will begin originating mortgage and home equity products under the Bank of America brand by mid-2009.
•The company will focus on responsible home lending, serving as a reliable source of mortgages for the American consumer. Bank of America also will assist new and existing customers with selecting the right product to meet their needs.
•The Consumer Real Estate and Insurance Services Group provides our customers products and services in three core product areas:
– Residential mortgage
– Home equity
– Insurance
•These products are available through Bank of America’s extensive banking center network, thousands of mortgage loan officers, online and via telephone.
•With the acquisition of Countrywide, Bank of America ranks as the nation’s leading mortgage originator, servicer and home equity provider.
•The majority of our originated mortgage products meets the conforming loan standards of the Government Sponsored Enterprises, Fannie Mae and Freddie Mac, or the Federal Housing Administration.
•We are also able to serve the unique home finance needs of the growing senior consumer population with reverse mortgage products available through a network of specially trained loan officers
•Bank of America’s Insurance Services Group is the world’s largest provider of loan protection products, as well as home warranty services, identity theft coverage and exclusive debt cancellation and borrower protection plans for credit card, home equity and mortgage customers.
•Through our acquisition of Countrywide, we’re also one of the leading providers of lender-placed insurance programs. Our Balboa insurance unit provides diversified consumer offerings, including auto, homeowners, renters and term life insurance.
Consumer and Small Business Bank
53
• Bank of America Consumer Real Estate Lending – First Mortgage generates revenue by providing an extensive lineof mortgage products and services to customers nationwide. The mortgage product offerings include fixed and adjustable rate loans, first and second lien loans for both home purchase and refinance needs.
• Customers can apply for a Bank of America mortgage at any branch or by calling the Bank of America Loan Line, serving 50 states and the District of Columbia. Customers can also access mortgage information online at www.bankofamerica.com/loansandhomes/
• As part of the Countrywide acquisition, Bank of America committed to offering the following types of first-lien mortgages:
– Conforming loans underwritten to standard guidelines of government-sponsored enterprises and the government, including FHA and VA loans and other loans designed for low-and moderate- income borrowers.
– Non-conforming loans with terms expected to produce no greater risk of default than conforming loans.
– Interest-only fixed-rate and adjustable-rate mortgages (ARMs) that are subject to a 10-year minimum interest-only period, which lessens the possibility of short-term payment shock, and fixed-period ARMs that provide borrowers low initial rates with the security of fixed payments, subject to protections against steep increases in payment amounts.
• Bank of America will not originate subprime mortgages, high-cost loans, no income/no asset loans, no ratio loans, non-GSE eligible stated income/stated asset loans. Bank of America will discontinue certain nontraditional mortgages - including option-ARM loans. It also will significantly curtail some other nontraditional mortgages, such as certain low-documentation loans and will implement enhanced borrower protections over time as part of the transition process.
• The newly combined Bank of America – Countrywide mortgage business is America’s largest loan servicer with a portfolio of nearly 2 trillion dollars, representing more than 15 million customers.
• We now have a combined network of more than 8,500 mortgage loan sales professionals in addition to our banking center sales staff and unmatched distribution of 6,100 banking centers – crossing a wide diversity of geographic and economic markets.
• As the nation’s leading home loan provider, Bank of America has taken a leadership role by making commitments to our customers and communities. This includes:
– Lending and investing $1.5 trillion for community development over the next 10 years.
– Committing to modifying at least $40 billion in loans over the next two years – helping more than 265,000 customers stay in their homes.
– Creation of a $35 million “Neighborhood Preservation Program” to help provide loan counseling, foreclosure prevention, and support for purchase and management of vacant properties.
• Beyond these commitments, when the combined company begins serving customers under the Bank of America brand in early 2009, we’ll have the opportunity to demonstrate the power of our shared capabilities with product and service offerings that further differentiate us from the competition.
Consumer Real Estate Lending – First Mortgage
Consumer and Small Business Bank
54
•Bank of America is the nation’s leading home equity provider, generating revenue by providing our customers with an extensive line of home equity products and services through contemporary retail channels, including banking centers, mortgage loan officers, Internet and phone. Product offerings include home equity lines of credit (HELOCs), with variable interest rate or fixed-rate loan options, and home equity loans.
•During 2008 the weakening housing market has impacted the credit quality of our home equity portfolio, with issues primarily centered in higher Combined Loan-to-Value (CLTV) HELOCs and HELOANs, particularly in states that have experienced significant home price reductions.
•We have taken strong actions to respond to these unprecedented conditions.
– We’ve adjusted our underwriting standards for the origination of HELOCs for the new environment to lower our CLTVs on all products, including more conservative standards in areas of the nation with declining markets.
– We have identified customers who are in greatest risk of default and either reduced or blocked their existing lines of credit based on a refreshed loan-to-value determination.
– We have significantly increased our loss mitigation capabilities in order reduce future defaults and help customers avoid foreclosure.
•During the first six months of 2008 Bank of America continued to expand our reverse mortgage business across our retail footprint, with more than 300 mortgage loan officers deployed in areas of the nation with the largest senior populations, including Florida, California, Arizona, Nevada, Washington, the Northeast and the Southeast.
Bank of America Consumer Real Estate Lending – Home Equity
Consumer and Small Business Bank
22.721.1
19.316.6
11.5
0
5
10
15
20
25
2Q 2007 3Q 2007 4Q 2007 1Q 2008 2Q 2008
Year
Home Equity Quarterly Production ($ in billions)
55
Consumer and Small Business Bank
Small Business Banking Overview
• Bank of America provides the tools, support and expertise needed to help small business owners realize their own vision of success.
• Bank of America is dedicated to providing its small business customers with:
– Innovative, easy to use products and services saving small business owners time and money
– Access to their bank on their time – small business owners can bank when they want, how they want, in as little time as possible
– The Expertise needed to help small business owners identify the right solutions to grow their business
– Commitment to help small business owners reach their goals
– Consistent delivery of superior service
• With more than 4 million small business households, Bank of America is uniquely positioned to understand the issues small business owners face. Our web site and the distribution capabilities of our banking centers, phone services and ATMs provide access to services and advice when and where small business owners need it.
• By leveraging the tools of today’s digital age, Bank of America makes it easier for small business owners to better manage their money and grow their business.
• Bank of America’s industry-leading Small Business Online Banking has more than 2MM active account users and 0.9MM active bill pay users.
• Small Business Market Leadership:
– Bank of America banks 23.3%* of all small businesses within our geographic footprint, making us the No. 1 small business bank in our territory
– Bank of America is #1 in small business debit card and credit card volume in the Nilson Report’s 2007 study.
• Key Business Strategies include:
– Bank of America employs approximately 700 Small Business Specialists in our banking centers to assist small business owner who generates up to $2.5 million in annual revenue.
– Personal Bankers are trained across the franchise to handle the business and personal transactions of small business owners
– Convenience is a primary driver for small business owners. All small business customers have access to Bank of America’s 6,131 banking centers and over 18,500 ATMs nationwide
• Products / Services include:
– Small Business Deposits: a comprehensive line of Checking, Savings, and Debit Card products.
– Small Business Lending: a suite of Credit products including Business Card, Loans & Lines of Credit, and Practice Solutions, a leading specialty lender that provides start up, practice acquisition, equipment and real estate financing to help dentists, physicians and veterinarians establish and expand their professional practice.
– Small Business Online Banking: a convenient and secure way of managing the needs of running a Small Business, which was recognized as “the best in the industry” by Keynote Systems. Online Business Suite and Easy Online Payroll™, winner of the Overall Most Innovative Monarch award in 2008, are a few of the integrated product solutions utilized via the web.
– Merchant Services, a set of card processing solutions which enable Small Businesses to accept credit cards, debit cards, electronic checks, gift cards, and other payment options.
– Small Business Online Community: Bank of America created the Small Business Online Community by listening to the needs of thousands of small business owners. Users engage in a dynamic, constantly changing site that evolves and grows based on the needs and interests of community members.
* Market penetration and ranking information in footprint is based on our proprietary 2006 Market Share Monitor Survey.
56
Global Consumer and Small Business Banking Segment Results (1,2)
Financial Summary
(Dollars in millions; except as noted)
Second First Fourth T hird SecondQ uarter Q uarter Q uarter Q uarter Q uarter
2008 2007 2008 2008 2007 2007 2007Net interest income (3)
$15,699 $14,113 $8,015 $7,684 $7,449 $7,252 $7,109Noninterest income:
C ard income 5,285 4,977 2,560 2,725 2,625 2,587 2,596 Service charges 3,309 2,865 1,743 1,566 1,624 1,519 1,488 Mortgage banking income 1,065 599 409 656 490 244 297 A ll other income 1,040 598 365 675 374 371 331
T otal noninterest income 10,699 9,039 5,077 5,622 5,113 4,721 4,712 T otal revenue, net of interest expense 26,398 23,152 13,092 13,306 12,562 11,973 11,821
P rovision for credit losses (4)13,000 5,505 6,545 6,455 4,296 3,122 3,094
Noninterest expense 10,426 9,593 5,293 5,133 5,509 4,969 4,910 Income before income taxes 2,972 8,054 1,254 1,718 2,757 3,882 3,817
Income tax expense (3)1,068 2,965 442 626 861 1,437 1,395
Net income $1,904 $5,089 $812 $1,092 $1,896 $2,445 $2,422
Net interest yield (3)8.40 % 8.13 % 8.52 % 8.25 % 8.03 % 8.31 % 8.14 %
Return on average equity 5.77 16.67 4.89 6.65 11.23 15.59 15.76
E fficiency ratio (3)39.50 41.43 40.43 38.58 43.85 41.50 41.54
Balance sheet (2)
A verageT otal loans and leases $365,581 $312,701 $368,136 $363,026 $353,144 $331,656 $317,247
T otal earning assets (5)375,781 349,937 378,575 374,391 368,137 346,250 350,200
T otal assets (5)428,764 403,359 430,179 428,754 426,113 399,195 403,257
T otal deposits 342,387 326,550 341,339 343,435 340,939 321,550 326,622
A llocated equity 66,409 61,578 66,835 65,983 66,988 62,222 61,661
Period end T otal loans and leases $364,535 $324,452 $364,535 $364,316 $359,983 $337,784 $324,452
T otal earning assets (5)374,801 349,134 374,801 383,862 383,448 347,056 349,134
T otal assets (5)426,562 403,684 426,562 437,231 443,071 401,150 403,684
T otal deposits 339,098 326,878 339,098 349,602 344,848 321,135 326,878
Period end (in billions)
Mortgage servicing portfolio $411.5 $360.1 $411.5 $404.3 $399.0 376.9 360.1
(1) G lobal C onsumer and Small Business Banking has three primary businesses: Deposits, C ard Services and C onsumer Real Estate. In addition, ALM/O ther includes the results of ALM activities and other consumer-related businesses (e.g., insurance). (2) Presented on a managed basis, specifically C ard Services. (See Exhibit A: Non-G AAP Reconciliations - G lobal C onsumer and Small Business Banking - Reconciliation on page 46).(3) Fully taxable-equivalent basis (4) Represents provision for credit losses on held loans combined with realized credit losses associated with the securitized loan portfolio.(5) Total earning assets and total assets include asset allocations to match liabilities (i.e., deposits).
C ertain prior period amounts have been reclassified among the segments to conform to the current period presentation.
Six Months EndedJ une 30
57
Global Consumer and Small Business Banking Results Financial Summary
(Dollars in millions)
C ard C onsumer A LM/
T otal (1) Deposits (2) Services (1)Real Estate O ther
Net interest income (3)$15,699 $3,838 $9,301 $1,319 $1,241
Noninterest income:C ard income 5,285 1,178 4,103 4 - Service charges 3,309 3,307 - 2 - Mortgage banking income 1,065 - - 1,065 - A ll other income (loss) 1,040 (3) 777 116 150
T otal noninterest income 10,699 4,482 4,880 1,187 150 T otal revenue, net of interest expense 26,398 8,320 14,181 2,506 1,391
P rovision for credit losses (4) 13,000 166 8,383 4,095 356 Noninterest expense 10,426 4,881 4,113 1,237 195
Income (loss) before income taxes 2,972 3,273 1,685 (2,826) 840 Income tax expense (benefit) (3) 1,068 1,214 613 (1,071) 312
Net income (loss) $1,904 $2,059 $1,072 $(1,755) $528
Net interest yield (3)8.40 % 2.35 % 8.07 % 2.07 % n/m
Return on average equity 5.77 24.93 4.66 (71.72) n/m
Efficiency ratio (3)39.50 58.67 29.00 49.41 n/m
A verage - total loans and leases $365,581 n/m $231,370 $120,780 n/mA verage - total deposits 342,387 $336,122 n/m n/m n/m
Period end - total assets (5)426,562 350,232 262,165 127,572 n/m
C ard C onsumer A LM/
T otal (1) Deposits (2) Services (1)Real Estate O ther
Net interest income (3)$14,113 $4,741 $8,003 $1,070 $299
Noninterest income:C ard income 4,977 1,039 3,935 3 - Service charges 2,865 2,863 - 2 - Mortgage banking income 599 - - 599 - A ll other income (loss) 598 (2) 447 10 143
T otal noninterest income 9,039 3,900 4,382 614 143 T otal revenue, net of interest expense 23,152 8,641 12,385 1,684 442
P rovision for credit losses (4) 5,505 94 5,156 157 98 Noninterest expense 9,593 4,304 4,090 1,018 181
Income before income taxes 8,054 4,243 3,139 509 163 Income tax expense (3) 2,965 1,562 1,156 188 59
Net income $5,089 $2,681 $1,983 $321 $104
Net interest yield (3)8.13 % 3.04 % 7.93 % 2.10 % n/m
Return on average equity 16.67 36.35 9.23 17.58 n/m
Efficiency ratio (3)41.43 49.81 33.03 60.44 n/m
A verage - total loans and leases $312,701 n/m $202,758 $98,721 n/mA verage - total deposits 326,550 $320,610 n/m n/m n/m
Period end - total assets (5)403,684 336,371 238,861 113,215 n/m
(1) Presented on a managed basis, specifically C ard Services.(2) For the six months ended J une 30, 2008 and 2007, a total of $12.6 billion and $6.4 billion of deposits were migrated from G lobal C onsumer and Small Business Banking to G lobal W ealth and Investment Management.(3) Fully taxable-equivalent basis(4) Represents provision for credit losses on held loans combined with realized credit losses associated with the securitized loan portfolio.
(5) Total assets include asset allocations to match liabilities (i.e., deposits). n/m = not meaningful
C ertain prior period amounts have been reclassified among the segments to conform to the current period presentation.
Six Months Ended J une 30, 2008
Six Months Ended J une 30, 2007
58
Global Consumer and Small Business Banking Key Indicators
(Dollars in millions; except as noted)
Second First Fourth T hird SecondQ uarter Q uarter Q uarter Q uarter Q uarter
2008 2007 2008 2008 2007 2007 2007
Deposits Key IndicatorsA verage deposit balances
C hecking $126,423 $125,451 $127,487 $125,358 $124,340 $121,904 $125,771Savings 29,426 29,882 30,057 28,796 28,927 28,533 30,029 MMS 67,887 63,352 69,547 66,228 64,628 60,890 62,554 C D's & IRA 's 110,157 99,555 105,277 115,038 114,538 101,358 99,546 Foreign and other 2,229 2,370 2,394 2,062 3,004 2,711 2,381
T otal average deposit balances $336,122 $320,610 $334,762 $337,482 $335,437 $315,396 $320,281
T otal balances migrated to P remier Banking and Investments $12,627 $6,408 $5,598 $7,029 $2,443 $2,560 $2,857
Deposit spreads (ex cludes noninterest costs)C hecking 4.21 % 4.25 % 4.15 % 4.29 % 4.31 % 4.30 % 4.27 %Savings 3.79 3.74 3.70 3.89 3.77 3.71 3.71MMS 1.42 3.39 1.30 1.54 2.83 3.43 3.36C D's & IRA 's 0.47 1.11 0.40 0.53 0.89 1.06 1.10Foreign and other 4.46 4.34 4.47 4.44 4.38 4.32 4.28
Total deposit spreads 2.36 3.05 2.32 2.41 2.79 3.02 3.04
Net new retail checking (units in thousands) 1,231 1,204 674 557 343 757 717 Debit purchase volumes $104,380 $90,991 $54,298 $50,082 $51,133 $47,329 $47,422
O nline banking (end of period) A ctive accounts (units in thousands) 25,299 22,190 25,299 24,949 23,791 23,057 22,190 A ctive billpay accounts (units in thousands) 13,269 11,567 13,269 13,081 12,552 11,928 11,567
C ard Services Key IndicatorsManaged C ard - US C onsumer and Business C ard
G ross interest yield 11.43 % 12.82 % 11.13 % 11.74 % 12.32 % 12.71 % 12.80 %
Risk adjusted margin (1) 6.14 7.71 5.76 6.51 7.57 7.78 7.61 Loss rates 6.16 5.01 6.65 5.67 5.03 4.84 5.21 A verage outstandings $162,197 $146,838 $162,709 $161,685 $156,329 $151,405 $146,693Ending outstandings 163,315 148,746 163,315 161,353 161,373 153,039 148,746 New account growth (in thousands) 4,254 4,479 2,212 2,042 2,164 2,546 2,387 Purchase volumes $117,770 $116,703 $61,013 $56,757 $64,713 $61,247 $61,275Delinquencies:
30 Day 5.88 % 5.29 % 5.88 % 5.93 % 5.70 % 5.42 % 5.29 %90 Day 3.03 2.68 3.03 3.01 2.80 2.57 2.68
C onsumer Real Estate Key IndicatorsMortgage servicing rights at fair value period end balance $4,250 $3,269 $4,250 $3,163 $3,053 $3,179 $3,269C apitalized mortgage servicing rights (% of loans serviced) 145 bps 141 bps 145 bps 118 bps 118 bps 130 bps 141 bpsMortgage loans serviced for investors (in billions) $292 $232 $292 $268 $259 $245 $232
G lobal C onsumer and Small Business BankingMortgage production $36,559 $46,401 $18,515 $18,044 $22,370 $24,533 $25,755Home equity production 22,818 35,873 8,997 13,821 16,001 17,352 18,552
Total C orporationMortgage production 44,360 52,621 22,438 21,922 24,834 26,930 29,172 Home equity production 28,141 43,779 11,500 16,641 19,299 21,105 22,746
(1) Reflects margin and noninterest revenue, adjusted for loss rates.
C ertain prior period amounts have been reclassified among the segments to conform to the current period presentation.
Six Months E ndedJ une 30
59
Credit Card Data (1)
(Dollars in millions)
Second First Fourth T hird SecondQ uarter Q uarter Q uarter Q uarter Q uarter
2008 2007 2008 2008 2007 2007 2007
L oans Period end
Held credit card outstandings $78,642 $69,241 $78,642 $75,911 $80,724 $71,702 $69,241Securitization impact 108,520 100,611 108,520 107,847 102,967 102,068 100,611
Managed credit card outstandings $187,162 $169,852 $187,162 $183,758 $183,691 $173,770 $169,852
A verageHeld credit card outstandings $78,370 $68,515 $78,221 $78,518 $74,392 $69,486 $68,181Securitization impact 106,306 98,966 107,438 105,176 104,019 102,516 99,388
Managed credit card outstandings $184,676 $167,481 $185,659 $183,694 $178,411 $172,002 $167,569
C redit Q ualityC harge-O ffs $
Held net charge-offs $2,064 $1,787 $1,108 $956 $846 $808 $893Securitization impact 3,059 2,265 1,643 1,416 1,292 1,216 1,206
Managed credit card net losses $5,123 $4,052 $2,751 $2,372 $2,138 $2,024 $2,099
C harge-O ffs %Held net charge-offs 5.29 % 5.26 % 5.69 % 4.90 % 4.51 % 4.61 % 5.25 %Securitization impact 0.29 (0.38) 0.27 0.29 0.24 0.06 (0.23)
Managed credit card net losses 5.58 % 4.88 % 5.96 % 5.19 % 4.75 % 4.67 % 5.02 %
30+ Delinquency $Held delinquency $4,121 $3,593 $4,121 $4,017 $4,298 $3,727 $3,593Securitization impact 6,226 5,034 6,226 6,288 5,710 5,381 5,034
Managed delinquency $10,347 $8,627 $10,347 $10,305 $10,008 $9,108 $8,627
30+ Delinquency %Held delinquency 5.24 % 5.19 % 5.24 % 5.29 % 5.32 % 5.20 % 5.19 %Securitization impact 0.29 (0.11) 0.29 0.32 0.13 0.04 (0.11)
Managed delinquency 5.53 % 5.08 % 5.53 % 5.61 % 5.45 % 5.24 % 5.08 %
90+ Delinquency $Held delinquency $2,109 $1,850 $2,109 $2,055 $2,127 $1,788 $1,850Securitization impact 3,169 2,480 3,169 3,137 2,757 2,514 2,480
Managed delinquency $5,278 $4,330 $5,278 $5,192 $4,884 $4,302 $4,330
90+ Delinquency %Held delinquency 2.68 % 2.67 % 2.68 % 2.71 % 2.63 % 2.49 % 2.67 %Securitization impact 0.14 (0.12) 0.14 0.12 0.03 (0.01) (0.12)
Managed delinquency 2.82 % 2.55 % 2.82 % 2.83 % 2.66 % 2.48 % 2.55 %
(1) C redit C ard includes U.S. C onsumer C ard and foreign credit card. Does not include Business C redit C ard.
C ertain prior period amounts have been reclassified to conform to the current period presentation.
Six Months E ndedJ une 30
60
Global Corporate & Investment Banking (GCIB)
Global Corporate & Investment Banking (GCIB) delivers a wide range of financial services and opportunities focused on meeting the unique needs of more than 140,000 clients—ranging from small, high-growth and middle-market companies to large multinational corporations, government entities, financial sponsors and institutional investors.
With offices across the U.S. and in key financial centers around the world, our client teams provide integrated financial solutions to meet the lifecycle needs of our clients.
Business strategy:
• Focus: Deepen and broaden client coverage across core businesses
• Discipline: Maximize integrated product delivery aligned with client strategies
• Execution: Perform as the trusted advisor and essential partner to our clients
Core businesses:
• Global Commercial Banking • Global Product Solutions
• Global Investment Banking • Global Markets
• International
Market leadership:
• A leading provider to:
– 99% of the US Fortune 500
– 97% of the US Fortune 1000
– 83% of the Global Fortune 500
Global Commercial BankingGlobal Commercial Banking serves more than 109,000 business banking and more than 46,000 middle-market clients through dedicated client teams who provide seamless, integrated delivery of the bank’s full capabilities, including investment banking and M&A, wealth and investment management, global treasury services and international banking services.
Key Businesses:
• Middle Market Banking
– Provides comprehensive financial solutions and advice to middle-market companies with revenues of more than $20 million
– Serves two in five of all middle-market companies operating within and surrounding our franchise
• Specialized Industries – Healthcare, Institutions and Government Banking
– A leading provider of comprehensive financial solutions to more than 12,000 Healthcare, Education, Not-for-Profit, and Government clients across public and private sectors
– Dedicated team of more than 700 specialists provides insightful ideas and advice based on an in-depth understanding of our clients’ business and industry
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• Business Banking
– One of the largest providers of financial solutions and expertise to growing companies in the U.S. with annual revenues between $2.5 million and $20 million
– Provides personal banking and investments to the business owner through partnership with Premier Banking and Banc of America Investment Services
• Commercial Real Estate Banking
– One of the largest providers of real estate financial services in the U.S. offering project and corporate finance as well as comprehensive financial solutions for a broad array of clients, including public and private Real Estate Investment Trusts, funds and commercial and residential development companies
– Delivers focused expertise and comprehensive, integrated solutions, including acquisition, construction, bridge, interim and mezzanine financing as well as capital raising, strategic advisory, treasury and risk management
• Bank of America Business Capital
– One of world’s largest asset-based lenders, providing secured credit facilities and other complementary banking products and services to mid-size and large companies
– Delivers financing solutions of $5 million and more to manufacturers, wholesalers, distributors and service companies
• Dealer Financial Services
– One of the largest bank-owned dealer finance groups in the U.S., serving automobile, recreational vehicle and marine dealers nationwide
– Products include commercial lending, indirect retail financing (point-of-sale), direct consumer lending, whole-loan purchases, treasury management, merchant card and wealth management
Market leadership:
• #1 market position in all core businesses (a)
• #1 in syndicated loans to middle-market companies (b)
• Top lead arranger of asset-based loans (based on number of deals and volume) 2008 YTD (c)
• A leader in leveraging Low Income Housing Tax Credits, Historic Tax Credits and other taxincentives created to increase investment in housing developments, we have provided morethan $5 billion to create nearly 300,000 units of safe, clean, affordable housing inapproximately 2,600 projects since 1988(d)
• National Real Estate Investor Top Direct Lender and Financial Intermediary (2004-2007) (e)
• #1 financial adviser in 2006 and 2007 for real estate deals in terms of value (f)
Global Corporate & Investment Banking
(a) Bank of America proprietary research(b) Security Data Corporation(c) As of June 30, 2008, Loan Pricing Corp.(d) Bank of America(e) National Real Estate Investor(f) SNL interactive
62
Global Investment BankingGlobal Investment Banking (GIB) focuses on building long-term relationships with more than 4,000 U.S. and multi-national corporations, financial institutions and financial sponsors, by providing strong advisory expertise and capitalizing on powerful M&A, corporate banking, treasury, debt and equity product expertise to deliver integrated financial solutions.
Key businesses:
• Corporate Banking • Equity and debt capital markets
• Financial sponsors • M&A
Industry focus:
• Business & Technology Services
• Consumer & Retail
• Financial Institutions
Market leadership:
• #1 in U.S. large corporate banking relationships (a)
• #2 largest underwriter of debt to financial sponsors in the U.S. (b)
• Second largest underwriter of capital in leveraged financings for non-investment grade companies (c)
• “Top 5 for service quality among America’s Best Investment Banks” (d)
Recent successes:
• $19.7 billion IPO for Visa, largest U.S. IPO in history (Joint Bookrunner)
• $8.9 billion acquisition of Barr Pharmaceuticals by Teva Pharmaceutical Industries (ExclusiveFinancial Advisor to Barr) (announced)
• $4 billion global notes for AT&T (Joint Bookrunner)
• $4 billion global notes for Verizon (Joint Bookrunner)
• $3.3 billion all-stock Reverse Morris Trust transaction by J. M. Smucker and Procter & Gamble to merge the Folgers coffee business into Smucker (M&A Advisor to Smucker) (announced)
• $2.9 billion acquisition of Pharmion by Celgene (Exclusive Financial Advisor to Pharmion)
• $2 billion follow-on offering for Nucor (Joint Bookrunner)
• $650 million acquisition of Newsday Group by Cablevision (Lead Financial Advisor to Cablevision)(announced)
• $483 million follow-on offering and $365 million convertible debentures for MGIC (Sole Bookrunner)
• $60 billion of refinanced debt and new facilities for GMAC (various Lead roles), including $14 billionResidential Capital restructuring, the largest consensual corporate exchange and tender offer in the history of the high yield market (Joint-Lead Dealer Manager)
• $1.3 billion acquisition of Axcan Pharma by TPG (Exclusive Financial Advisor to TPG), $290 millionsenior credit facilities (Joint Lead Arranger) and $460 million senior secured notes (Joint Bookrunner)
(a) Independent Research Consulting Firm, 2007(b) Freeman & Co., 2007(c) Thomson Financial, 2007(d) Institutional Investor, 2007
Global Corporate & Investment Banking
• Global Industries
• Healthcare
• Media & Telecom
• Natural Resources
• Real Estate & Gaming
• Technology
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Estimated fees include M&A, Equity, High Yield, High Grade, ABS, and Loan Syndications.Source: BAS Wall Street Wallet database and analysis for U.S. completed transactions only. Estimated rank and percentage share of wallet based on third party data providers, deal information and BAS estimates.
Global Corporate & Investment Banking
1H 2008Rank:
FY 2007 Rank: 2 1 3 8 7 5 4 9 6 11FY 2007 Share: 9.3% 9.7% 8.3% 6.0% 6.1% 6.5% 7.2% 4.7% 6.3% 3.2%
11.1%
10.1%
9.0% 8.7%8.0%
5.6% 5.3%4.6% 4.4%
3.8%
JPM GS CITI BAS LEH ML MS UBS CS WACH
US Percent Market Share Based on EstimatedInvestment Banking Fees Paid to the Street in 1H 2008
64
Global Corporate & Investment Banking
Global MarketsGlobal Markets delivers a wide range of securities products and services, powerful sales and trading capabilities and risk management expertise across asset classes. Closely aligned with GCIB’s client-managed groups, Global Markets product specialists serve more than 3,000 institutional investors and 4,000 issuer clients.
Key businesses:
• Global Fixed Income
– Fixed income sales and trading, public finance, interest rate derivatives, commodities and global foreign exchange
• Global Equities
– Listed, OTC, ADR securities, algorithmic and program trading and equity financial products
• Global Capital Markets
– Equity and debt capital markets, leveraged finance, private placements and syndications
• Global Structured Products and Institutional Client Management
– Asset-backed, mortgage-backed, commercial/residential mortgage-backed securities and institutional client management
• Global Markets Research
– Equity/debt research in key sectors and credit strategy
Market leadership:
• #1 Trading Execution Quality for money managers (a)
• #1 U.S. Leveraged Loans (154 transactions valued at more than $31 billion, 21% market share) (b)
• #1 U.S. Mortgage-Backed Securities (25 issues, 17.2% market share) (c)
• #1 Equity Convertibles (19 issues, 18.9% market share) (c)
• #2 U.S. High Yield Corporate Debt (35 valued at more than $5 billion, 17.6% market share) (c)
• #2 U.S. Syndicated loans (288 transactions valued at more than $74 billion, 18% market share) (b)
• #3 U.S. Investment Grade (107 transactions valued at more than $56 billion, 11.3% market share) (c)
Recent successes:
• Best Debt House – North America 2008 (for the second consecutive year) (d)
• U.S. Loan House of the Year 2007 (e)
• U.S. Dollar High Yield Deal of the Year 2007: Platinum Equity’s acquisition of Ryerson, Inc. (f)
• Best Investment Grade Corporate Bond House – U.S.2007 (f)
(a) Bloomberg Markets, 2007(b) As of June 30, 2008, LPC Data Corp.(c) As of June 30, 2008, Thomson Financial(d) Euromoney 2008(e) IFR 2007(f) Credit 2007
65
Global Corporate & Investment Banking
Global Product SolutionsGlobal Product Solutions (GPS) designs and delivers integrated credit and treasury products to more than 140,000 clients around the world, including small businesses, middle-market and largecompanies, multi-nationals, financial institutions and governments. These solutions includebusiness and corporate lending, global payments and liquidity management, commercial cardservices, trade finance, foreign exchange, lines of credit and equipment finance.
Organization:
• Has more than 9,000 associates worldwide
• Comprises six business units: Global Large Corporate and International Product Delivery, Product Management, Product Innovation and Development, Client Delivery and Services, Centralized Delivery (Underwrites, structures and negotiates treasury and credit client solutions) and Specialized Delivery (Global Trade & Supply Chain, Global Financial Institutions, Leasing and Merchant)
• Supports client sales teams through close partnership and integration with client managers in Global Commercial Banking and Corporate Banking
Business strategy:
• Enable and deliver integrated treasury and credit solutions to large corporate, commercial and business banking clients
• Increase the speed and efficiency of clients’ working capital and treasury operations
• Provide optimal liquidity and capital strategies for our clients and prospects
• Provide expertise in government financing and wholesale vendor financing, as well as tailored finance programs specific to industry segments, including aviation, healthcare, rail and energy services
• Lead the market with innovative products and a continued transformation of paper to electronic payments
• Provide market-leading, world-class service through effortless implementations, convenient access and a differentiated client experience.
Market leadership:
• #1 U.S. Treasury Management Revenue (a)
• #1 trade services provider in the U.S. (b)
• #1 treasury services provider for large corporate (b) and middle market companies in the U.S. (c)
• Delivers treasury solutions to 95% of Fortune 500 and 73% of Global Fortune 500
• #1 U.S. bank affiliated leasing company in net assets and new business volume (d)
Recent successes:
• Best Cash Management Bank in North America (e)
• Best Bank for Cash Management in North America (f)
(a) Ernst & Young 2007 U.S. Treasury Management Survey (based on 2006 Revenue)(b) Independent Research Consulting Firm, 2007(c) Independent Research Consulting Firm, 2006(d) Monitor, 2007(e) Treasury & Risk Management, 2007(f) Treasury Management International, 2007
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Global Corporate & Investment Banking
InternationalGCIB is focused internationally on building a profitable universal bank with core competencies in Corporate Banking, Global Markets and Global Product Solutions. Leveraging its top-tier strength in the U.S., GCIB targets international corporate and institutional clients with strong U.S. interests as well as U.S.-based clients with global needs
Europe, Middle East and AfricaWith a presence in the region since 1922, GCIB has offices in the United Kingdom, Belgium, France, Germany, Greece, Italy, The Netherlands, The Republic of Ireland and Spain.
Recent successes:
• IAWS acquisition of Lion Capital’s 32% shareholding in Hiestand (Financial Advisor and Lead Financing Provider to IAWS) and €795 million syndicated facility (Financial Advisor and MLA)
• Compucom acquisition of the North American operations of Getronics (Exclusive Financial Advisor to Getronics)
• $2.7 billion permanent facility (Joint Lead Arranger ) and $1.7 billion senior notes (Joint bookrunner ) related to the Cadbury Schweppes demerger of the American Beverages division (Dr. Pepper and Snapple Group)
• $3 billion senior notes for E.ON (Joint Bookrunner and Billing & Delivery Agent)
• $1.8 billion senior notes for Veolia Environnement (Global Coordinator, Joint Bookrunner and Billing& Delivery Agent)
• $1.4 billion senior notes for Vivendi (Joint Bookrunner and Billing & Delivery Agent )
AsiaBank of America has maintained a presence in Hong Kong for more than 100 years and in the broader Asia region for 60 years. The bank has offices in 12 countries throughout the region, including Australia, India, Indonesia, Japan, Korea, Malaysia, People’s Republic of China, Hong Kong SAR, The Philippines, Singapore, Taiwan and Thailand. Principal businesses include Corporate Banking, Global Markets and Global Product Solutions. Primary areas of focus are capital markets, global trading, global cash management, trade finance, leasing and financial advisory services.
Latin AmericaBank of America provides treasury management and trade services to corporations and financial institutions throughout the region. Bank of America Mexico provides debt capital raising, corporate finance, derivatives, and foreign exchange services to large local corporations, multinational companies, government agencies, banks and institutional investors.
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Global Corporate and Investment Banking Segment Results (1)
(Dollars in millions)
Second First Fourth T hird Second
Q uarter Q uarter Q uarter Q uarter Q uarter2008 2007 2008 2008 2007 2007 2007
Net interest income (2) $7,415 $5,017 $3,824 $3,591 $3,419 $2,724 $2,609Noninterest income:
Service charges 1,644 1,337 856 788 760 673 683Investment and brokerage services 455 454 210 245 223 236 221 Investment banking income 1,430 1,524 765 665 576 436 821 T rading account profits (losses) (1,421) 1,832 369 (1,790) (5,376) (1,376) 937 A ll other income (loss) (404) 1,222 (64) (340) (315) 238 672
T otal noninterest income 1,704 6,369 2,136 (432) (4,132) 207 3,334 T otal revenue, net of interest expense 9,119 11,386 5,960 3,159 (713) 2,931 5,943
Provision for credit losses 886 157 363 523 274 227 42 Noninterest expense 5,265 6,205 2,801 2,464 3,428 2,560 3,227
Income (loss) before income taxes 2,968 5,024 2,796 172 (4,415) 144 2,674Income tax expense (benefit) (2) 1,115 1,858 1,050 65 (1,648) 60 982
Net income (loss) $1,853 $3,166 $1,746 $107 $(2,767) $84 $1,692
Net interest yield (2) 2.10 % 1.53 % 2.20 % 2.01 % 1.89 % 1.63 % 1.55 Return on average equity 6.23 15.28 11.57 0.73 (20.50) 0.76 16.15 E fficiency ratio (2) 57.74 54.50 46.99 78.00 n/m 87.32 54.31
Balance sheet
A verageT otal loans and leases $329,714 $250,913 $334,680 $324,748 $325,730 $267,758 $253,895T otal trading-related assets 349,490 368,896 337,059 361,921 354,334 356,867 377,171 T otal market-based earning assets (3) 389,504 418,073 375,274 403,733 407,315 407,066 426,759 T otal earning assets (4) 709,498 661,832 700,178 718,819 718,684 663,181 673,184 T otal assets (4) 824,417 749,798 814,358 834,476 823,763 757,644 765,118 T otal deposits 235,202 214,402 234,605 235,800 236,254 217,632 220,180 A llocated equity 59,831 41,783 60,702 58,959 53,552 44,028 42,010
Period endT otal loans and leases $344,628 $257,537 $344,628 $325,774 $324,181 $275,427 $257,537T otal trading-related assets 303,423 342,629 303,423 317,256 308,315 333,107 342,629 T otal market-based earning assets (3) 335,207 386,958 335,207 347,877 360,276 375,100 386,958 T otal earning assets (4) 668,348 637,880 668,348 668,959 673,536 636,794 637,880 T otal assets (4) 779,138 731,377 779,138 791,954 776,202 738,631 731,377 T otal deposits 228,817 221,866 228,817 233,778 246,788 211,577 221,866
(1) G lobal C orporate and Investment Banking has three primary businesses: Business Lending, C apital Markets and Advisory Services, and T reasury Services. In addition, ALM/O ther includes the results of ALM activities and other G lobal C orporate and Investment Banking activities.(2) Fully taxable-equivalent basis(3) Total market-based earning assets represents earning assets included in the C apital Markets and Advisory Services business but excludes loans that are accounted for at fair value in accordance with SFAS 159.(4) Total earning assets and total assets include asset allocations to match liabilities (i.e., deposits).n/m = not meaningful
C ertain prior period amounts have been reclassified among the segments to conform to the current period presentation.
Six Months Ended
J une 30
68
Global Corporate and Investment Banking Business Results
(Dollars in millions)
C apital MarketsBusiness and A dvisory T reasury A LM/
Total L ending Services (1) Services O ther
Net interest income (2)$7,415 $2,887 $2,729 $1,699 $100
Noninterest income:Service charges 1,644 291 63 1,289 1 Investment and brokerage services 455 - 434 21 -Investment banking income 1,430 - 1,430 - -T rading account profits (losses) (1,421) (47) (1,420) 37 9A ll other income (loss) (404) 532 (1,905) 945 24
T otal noninterest income 1,704 776 (1,398) 2,292 34 T otal revenue, net of interest expense 9,119 3,663 1,331 3,991 134
Provision for credit losses 886 920 (39) 5 - Noninterest expense 5,265 1,160 2,411 1,624 70
Income (loss) before income taxes 2,968 1,583 (1,041) 2,362 64
Income tax expense (benefit) (2)1,115 608 (388) 874 21
Net income (loss) $1,853 $975 $(653) $1,488 $43
Net interest yield (2)2.10 % 1.91 % n/m 2.19 % n/m
Return on average equity 6.23 9.01 (6.88) % 37.57 n/m
Efficiency ratio (2)57.74 31.66 n/m 40.70 n/m
A verage - total loans and leases $329,714 $301,460 $21,098 $7,151 n/mA verage - total deposits 235,202 n/m 63,240 171,698 n/m
Period end - total assets (3)779,138 321,263 393,564 195,554 n/m
C apital MarketsBusiness and A dvisory T reasury A LM/
T otal Lending Services (1) Services O ther
Net interest income (2)$5,017 $2,148 $1,141 $1,893 $(165)
Noninterest income:Service charges 1,337 248 63 1,026 - Investment and brokerage services 454 1 432 21 - Investment banking income 1,524 - 1,524 - -T rading account profits 1,832 2 1,801 28 1A ll other income 1,222 423 195 524 80
T otal noninterest income 6,369 674 4,015 1,599 81 T otal revenue, net of interest expense 11,386 2,822 5,156 3,492 (84)
Provision for credit losses 157 136 10 12 (1) Noninterest expense 6,205 1,039 3,319 1,736 111
Income (loss) before income taxes 5,024 1,647 1,827 1,744 (194) Income tax expense (benefit) (2)
1,858 609 676 645 (72)Net income (loss) $3,166 $1,038 $1,151 $1,099 $(122)
Net interest yield (2)1.53 % 1.86 % n/m 2.79 % n/m
Return on average equity 15.28 14.24 19.42 % 28.67 n/m
Efficiency ratio (2)54.50 36.83 64.39 49.72 n/m
A verage - total loans and leases $250,913 $229,264 $16,368 $5,270 n/mA verage - total deposits 214,402 n/m 63,132 151,119 n/mPeriod end - total assets (3)
731,377 241,497 436,002 162,472 n/m
(1) C apital Markets and Advisory Services revenue of $1.33 billion and $5.16 billion for the six months ended J une 30, 2008 and 2007 consists of $1.28 billion and $5.13 billion of market-based revenue, and $52 million and $22 million of net interest income on loans that are accounted for at fair value in accordance with SFAS 159.(2) Fully taxable-equivalent basis(3) Total assets include asset allocations to match liabilities (i.e., deposits).n/m = not meaningful
C ertain prior period amounts have been reclassified among the segments to conform to the current period presentation.
Six Months Ended J une 30, 2008
Six Months Ended J une 30, 2007
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Global Corporate and Investment Banking – Business Lending Key Indicators
(Dollars in millions)
Second First Fourth T hird SecondQ uarter Q uarter Q uarter Q uarter Q uarter
2008 2007 2008 2008 2007 2007 2007Business lending revenue, net of interest ex pense
C orporate lending (1) $576 $375 $256 $320 $244 $156 $196C ommercial lending 2,753 2,067 1,461 1,292 1,593 1,033 1,090 C onsumer indirect lending 334 380 310 24 64 170 201
Total revenue, net of interest ex pense $3,663 $2,822 $2,027 $1,636 $1,901 $1,359 $1,487
Business lending marg inC orporate lending 0.97 % 0.99 % 0.99 % 0.96 % 0.77 % 0.51 % 0.97 %C ommercial lending 1.55 1.49 1.50 1.60 2.18 1.49 1.52 C onsumer indirect lending 1.83 1.69 1.85 1.81 1.65 1.71 1.72
P rovision for credit lossesC orporate lending $(22) $2 $(32) $10 $(26) $66 $(3)C ommercial lending 618 (21) 294 324 144 70 (5) C onsumer indirect lending 324 155 135 189 162 102 41
Total provision for credit losses $920 $136 $397 $523 $280 $238 $33
C redit quality (2, 3, 4)
Utilized critic ized ex posureC orporate lending $4,942 $789 $4,942 $3,242 $2,102 $1,538 $789
4.98 % 1.02 % 4.98 % 3.28 % 2.44 % 1.98 % 1.02 %C ommercial lending $21,168 $5,635 $21,168 $17,351 $13,926 $8,006 $5,635
7.98 % 3.12 % 7.98 % 6.75 % 5.40 % 4.23 % 3.12 %Total utilized critic ized ex posure $26,110 $6,424 $26,110 $20,593 $16,028 $9,544 $6,424
7.17 % 2.49 % 7.17 % 5.79 % 4.81 % 3.58 % 2.49 %
Nonperforming assetsC orporate lending $150 $21 $150 $150 $115 $269 $21
0.28 % 0.06 % 0.28 % 0.30 % 0.24 % 0.62 % 0.06 %C ommercial lending $3,680 $698 $3,680 $2,603 $1,923 $777 $698
1.42 % 0.36 % 1.42 % 1.02 % 0.78 % 0.39 % 0.36 %Total nonperforming assets $3,830 $719 $3,830 $2,753 $2,038 $1,046 $719
1.22 % 0.31 % 1.22 % 0.91 % 0.69 % 0.43 % 0.31 %
A verage loans and leases by productC ommercial $155,167 $116,511 $157,743 $152,591 $149,862 $120,355 $115,814Leases 24,276 21,590 24,287 24,264 24,273 22,051 21,725 Foreign 22,642 14,718 23,817 21,467 22,030 17,430 14,977 Real estate 57,968 34,230 58,448 57,488 55,175 36,120 34,476 C onsumer 39,555 40,144 40,345 38,765 39,613 40,956 40,792 O ther 1,852 2,071 1,820 1,885 1,988 1,940 1,972
Total average loans and leases $301,460 $229,264 $306,460 $296,460 $292,941 $238,852 $229,756
(1) T otal corporate lending revenue $576 $375 $256 $320 $244 $156 $196 Less: Impact of credit mitigation 64 (14) (5) 69 7 (7) (3) C orporate lending revenues excluding credit mitigation $512 $389 $261 $251 $237 $163 $199
(2) C riticized exposure corresponds to the Special Mention, Substandard and Doubtful asset categories defined by regulatory authorities. T he criticized exposure is on an end-of-period basis and are also shown as a percentage of total commercial utilized credit exposure, including loans and leases, standby letters of credit, and financial guarantees, derivative assets, and commercial letters of credit.(3) Nonperforming assets are on an end-of-period basis and defined as nonperforming loans and leases plus foreclosed properties. T he nonperforming ratio is nonperforming assets divided by commercial loans and leases plus commercial foreclosed properties.(4) C riticized exposure related to the fair value option portfolio are not included. T here are no nonperforming assets in the fair value portfolio.
C ertain prior period amounts have been reclassified among the segments to conform to the current period presentation.
Six Months EndedJ une 30
70
Global Corporate and Investment Banking – Capital Markets and Advisory Services Key Indicators
(Dollars in millions)
Second First Fourth T hird SecondQ uarter Q uarter Q uarter Q uarter Q uarter
2008 2007 2008 2008 2007 2007 2007Investment banking income
A dvisory fees $117 $240 $51 $66 $112 $94 $110Debt underwriting 963 1,114 604 359 377 281 611 Equity underwriting 350 170 110 240 88 61 100
Total investment banking income 1,430 1,524 765 665 577 436 821
Sales and trading revenueFixed income:
Liquid products 2,012 1,049 1,290 722 624 614 592 C redit products (18) 883 495 (513) (410) (824) 362 Structured products (2,776) 811 (923) (1,853) (5,513) (617) 494
Total fix ed income (782) 2,743 862 (1,644) (5,299) (827) 1,448 Equity income 631 867 298 333 205 252 441
Total sales and trading revenue (151) 3,610 1,160 (1,311) (5,094) (575) 1,889 Total C apital Markets and A dvisory Services market-based revenue (1)
$1,279 $5,134 $1,925 $(646) $(4,517) $(139) $2,710
Balance sheet (average)T rading account securities $186,983 $179,058 $183,119 $190,849 $188,925 $192,844 $185,839Reverse repurchases 53,920 68,661 51,655 56,184 51,266 52,436 70,821 Securities borrowed 72,291 94,910 65,742 78,839 84,399 81,404 92,056 Derivative assets 35,245 24,366 35,537 34,953 28,282 28,611 26,644
Total trading -related assets $348,439 $366,995 $336,053 $360,825 $352,872 $355,295 $375,360
Sales credits from secondary tradingLiquid products 1,152 953 557 595 534 577 501C redit products 587 643 306 281 279 352 341 Structured products 368 467 202 166 133 161 243 Equities 541 587 259 282 262 277 303
Total sales credits 2,648 2,650 1,324 1,324 1,208 1,367 1,388
V olatility of product revenues - 1 std devLiquid products $26.5 $9.1 $23.6 $28.7 $10.4 $16.3 $9.0C redit products 13.2 6.2 7.2 13.8 12.0 21.8 6.3Structured products 11.3 7.5 8.8 13.4 408.1 33.5 7.2Equities 9.4 5.6 8.7 10.7 7.3 16.3 6.3
Total volatility 58.6 15.6 44.3 64.6 405.5 54.9 16.2
(1) Market-based revenue excludes $52 million and $22 million for the the six months ended J une 30, 2008 and 2007, and $25 million, $27 million, $26 million, $22 million and $22 million, respectively, for the three months ended J une 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and J une 30, 2007, of net interest income on loans that are accounted for at fair value in accordance with SFAS 159.
C ertain prior period amounts have been reclassified among the segments to conform to the current period presentation.
Six Months EndedJ une 30
71
Global Wealth & Investment Management entities deliver comprehensive financial solutions shaped by personalized investment guidance and client-focused services to more than three million individual and institutional clients. Clients have access to services offered through three primary businesses: Premier Banking & InvestmentsTM; U.S. Trust, Bank of America Private Wealth Management; and Columbia Management. According to the October 2007 Barron’s Survey, entities within GWIM comprise the third largest U.S. wealth manager based on individual clients with accounts of $1 million or more as of June 30, 2007.
Premier Banking & Investments delivers integrated solutions through full service banking through Bank of America, N.A. and investment products through Banc of America Investment Services, Inc. to the mass affluent, a market segment we believe to be underserved by traditional private banking models.
U.S. Trust is one of the leading private banks in the U.S. and provides integrated credit, deposit, investment management and trust services as well as specialty asset management services to wealthy clients who typically have investable assets of $3 million or more.
Columbia Management is one of the world’s largest asset managers and the provider of proprietary asset management products to retail and institutional investors.
GWIM clients may also receive products and services from Alternative Investment Solutions (AI Solutions), which provides qualified individual investors and institutions access to hedge funds and private equity funds and tailored investments. Bank of America Retirement & GWIM Client Solutions provides personal and institutional retirement solutions for customers throughout the enterprise, in addition to philanthropic management and other services and products for clients of GWIM.
Source: Bank of America. Global Wealth & Investment Management is the wealth and investment management division of Bank of America Corporation. As of June 30, 2008, Global Wealth & Investment Management entities managed assets of $589.4 billion and had $867.4 billion in total client assets and quarterly average deposits and loans of $157.1 billion and $87.5 billion respectively, and more than 14,000 associates nationwide.
Global Wealth & Investment Management is a division of Bank of America Corporation. Banc of America Investment Services, Inc.®, U.S. Trust, Bank of America Private Wealth Management and Columbia Management are all affiliates within Global Wealth & Investment Management.
Premier Banking & InvestmentsTM is offered through Bank of America Premier Banking® and Banc of America Investment Services, Inc.
Banking products are provided by Bank of America, N.A., Member FDIC.
Investment products:
Investment products and services may be available through a relationship managed by U.S. Trust, Bank of America Private Wealth Management, or through a relationship with Banc of America Investment Services, Inc.® Certain Private Wealth Management associates are registered representatives with Banc of America Investment Services, Inc. and may assist you with investment products and services provided through Banc of America Investment Services, Inc. and other nonbank investment affiliates. Banc of America Investment Services, Inc. is a registered broker-dealer, member FINRA and SIPC, and a nonbank subsidiary of Bank of America, N.A. U.S. Trust, Bank of America Private Wealth Management operates through Bank of America, N.A., and other subsidiaries of Bank of America Corporation.
Alternative Investment Solutions (“AI Solutions”) is part of Global Wealth & Investment Management, a division of Bank of America Corporation, and provides qualified clients with a range of alternative asset products. AI Solutions performs advisory services through Banc of America Investment Advisors, Inc. (BAIA), Bank of America Capital Advisors LLC (BACA), and U.S. Trust Hedge Fund Management, Inc. All are SEC-registered investment advisors and are indirect wholly owned subsidiaries of Bank of America Corporation.
Columbia Management Group, LLC (“Columbia Management”) is the investment management division of Bank of America Corporation. Columbia Management entities furnish investment management services and products for institutional and individual investors.
Global Wealth & Investment Management
Are Not FDIC Insured May Lose Value Are Not Bank Guaranteed
72
Global Wealth & Investment Management
Premier Banking & Investments helps affluent clients build and preserve wealth by delivering personalized banking and investment services through dedicated client teams at Bank of America, N.A. and Banc of America Investment Services, Inc.
Client teams consisting of a Bank of America Premier Banking Client Manager and a Banc of America Investment Services, Inc. Financial Advisor work directly with affluent clients to provide comprehensive financial strategies and customized banking and investment solutions to help clients manage their financial lives and pursue their goals.
Client benefits include:
• Close personal attention,
• Priority customer service,
• Access to specialists in banking and investment services,
• No annual fees or service charges on many Bank of America, N.A. accounts and services,
• Preferred rates and discounts on many loans and credit cards. (Normal credit standards apply.)
Premier Banking & Investments focuses on serving clients with up to $3 million in total investable assets and is generally available to clients with balances in designated deposits and investments totaling at least $100,000 with Bank of America and its affiliates.
With a network of approximately 5,600 client facing professionals, Premier Banking and Investments serves more than 800,000 client households in Premier Banking and more than 1,000,000 client households in Banc of America Investment Services, Inc. (BAI), one of the largest bank-owned brokerage companies in the U.S.
Banc of America Investment Services, Inc. provides full-service and online, self-directed brokerage and provides access to services featuring investment tools and non-FDIC-insured investment products, including stocks, bonds, fixed-income securities, mutual funds and separately managed accounts.
For the quarter ending June 30, 2008, Premier Banking & Investments had total average deposits of $120.3 billion and total average loans of $36.5 billion.
Premier Banking & Investments
73
Global Wealth & Investment Management
On July 1, 2007, Bank of America completed the acquisition of U.S. Trust Corporation, combining it with The Private Bank and its ultra-wealthy extension, Family Wealth Advisors, to form U.S. Trust, Bank of America Private Wealth Management, one of the leading private wealth management organizations in the United States. The acquisition further expands the capabilities and solutions of the Global Wealth & Investment Management division’s alternative investments and proprietary asset management areas.
U.S. Trust provides comprehensive wealth management solutions to wealthy and ultra-wealthy clients who typically have investable assets of $3 million or more. In addition, U.S. Trust provides resources and customized solutions to help meet clients’ needs in wealth structuring, investment management, trust and banking services as well as specialty asset management services (oil and gas, real estate, farm and ranch land, timberland, private business and tax advisory). Clients also benefit from access to resources available through the corporation including capital markets products, large and complex financing solutions, and its extensive banking platform.
Clients may also receive products and services from Alternative Investment Solutions (AI Solutions), which gives qualified individual investors and institutions access to hedge funds and private equity funds and tailored investments.
For the quarter ending June 30, 2008, U.S. Trust had $320.5 billion in total client assets and total average loans of $51.0 billion and total average deposits of $36.4 billion.
U.S. Trust, Bank of America Private Wealth Management
74
Global Wealth & Investment Management
Columbia Management is one of the largest asset managers in the U.S. and the investment management division of Bank of America. Columbia Management offers investment products to clients and shareholders across every major asset class and investment style. Its entities furnish investment management services and advise institutional and mutual fund portfolios.
Columbia Management distributes this diverse set of products to Bank of America clients and other investors around the world. Investment choices include a wide array of equity, fixed income and money market mutual funds and a growing list of managed and separately managed account products.
Columbia Management's institutional distribution channels provide sales and service to large corporate, public fund and liquidity strategies clients. On the retail side, its wholesaling team provides investment management products to financial intermediaries in all major channels including broker dealer, independent advisor, financial institution, insurance and 401(k) providers. In addition, Columbia Management provides products to clients of U.S. Trust, Bank of America Private Wealth Management and Banc of America Investment Services, Inc.
Columbia Management #1 in Barron’s five-year rankings
10
9
8
7
6
5
4
3
2
1
66.03Jennison Dryden
66.45Pimco/Allianz
66.99Munder Capital
67.33Ivy Investments
67.67Vanguard
68.48Eaton Vance
70.17Janus Capital
70.36The Hartford
71.01Oppenheimer Funds
71.26Columbia/BOA
10
9
8
7
6
5
4
3
2
1
66.03Jennison Dryden
66.45Pimco/Allianz
66.99Munder Capital
67.33Ivy Investments
67.67Vanguard
68.48Eaton Vance
70.17Janus Capital
70.36The Hartford
71.01Oppenheimer Funds
71.26Columbia/BOA
Weighted Score
Columbia Management
Barron’s, February 4, 2008. Past performance is no guarantee of future results. For the one, five and ten year periods ended 12/31/07, our fund family ranked 19 (of 67 fund families), 1 (of 61 fund families) and 17 (of 52 fund families) in the annual Barron's/Lipper Fund Families Survey. Mutual funds advised by Columbia Management, the investment management division of Bank of America Corporation and its affiliates. To qualify for the survey, fund families must have had a diversified offering of portfolios (money market funds were excluded). Lipper calculated the returns of each fund, adjusted for 12b-1 fees and sales charges, and gave it a preliminary ranking, or percentile, in its category measuring how it compared with all peers tracked by Lipper. The percentile ranking was then weighted by asset size, relative to the fund family’s other assets in its general classification, e.g. world equity. This score was then multiplied by the weighting of its general classification, as determined by the entire Lipper universe of funds. Had 12b-1 fees or sales loads been included, rankings would have been lower. The information published here is presented as published with no guarantee as to completeness or accuracy.
Rankings for the one, five, and ten-year periods include performance of Excelsior Funds that, on December 31, 2007, were advised by UST Advisers, Inc. or its affiliate, both part of the former U.S. Trust Corporation. U.S. Trust Corporation was acquired by Bank of America Corporation on July 1, 2007.
Columbia Management Group, LLC (“Columbia Management”) is the investment management division of Bank of America Corporation. Columbia Management entities furnish investment management services and products for institutional and individual investors. Columbia funds are distributed by Columbia Management Distributors, Inc., member FINRA and SIPC. Columbia Management Distributors, Inc. is part of Columbia Management and an affiliate of Bank of America Corporation.
Columbia Management ranked #1 out of 61 mutual fund families by Lipper/Barron’s in its annual Fund Families Survey for the five-year period ending December 31, 2007, based on its overall performance across a variety of asset types.
Please read and consider the investment objectives, risks, charges and expenses for any fund carefully before investing. For a prospectus which contains this and other important information about the fund, contact your Columbia Management representative or financial advisor or go to www.columbiamanagement.com
75
Global Wealth and Investment Management Segment Results (1,2)
Other14%
Columbia Management
13%
Private Wealth Mangement
33%
Premier Banking & Investments
40%
Global Wealth & Investment Management 1H08 Total Revenue by Line of Business
(Dollars in millions, except as noted)
Second First Fourth T hird SecondQ uarter Q uarter Q uarter Q uarter Q uarter
2008 2007 2008 2008 2007 2007 2007Net interest income (3)
$2,131 $1,871 $1,133 $998 $989 $1,002 $949Noninterest income:
Investment and brokerage services 2,176 1,669 1,095 1,081 1,080 1,032 863A ll other income (loss) (106) 130 51 (157) (319) 44 77
T otal noninterest income 2,070 1,799 1,146 924 761 1,076 940 T otal revenue, net of interest expense 4,201 3,670 2,279 1,922 1,750 2,078 1,889
P rovision for credit losses 362 9 119 243 34 (29) (13)Noninterest expense 2,556 1,967 1,241 1,315 1,278 1,233 993
Income before income taxes 1,283 1,694 919 364 438 874 909
Income tax expense (3) 481 627 346 135 127 326 333Net income $802 $1,067 $573 $229 $311 $548 $576
Net interest yield (3) 2.82 % 3.16 % 2.91 % 2.73 % 2.86 % 3.10 % 3.14 %Return on average equity 13.82 24.51 19.58 7.95 10.86 20.33 26.35
E fficiency ratio (3) 60.84 53.59 54.44 68.43 73.03 59.31 52.57
Balance sheet
A verageT otal loans and leases $86,607 $66,907 $87,572 $85,642 $82,814 $77,044 $67,964
T otal earning assets (4) 151,765 119,329 156,418 147,111 137,140 128,154 121,024
T otal assets (4) 161,387 125,735 165,860 156,913 147,372 137,081 127,372 T otal deposits 152,807 116,614 157,113 148,501 138,161 127,819 118,254 A llocated equity 11,672 8,782 11,774 11,570 11,345 10,700 8,766
Period endT otal loans and leases $88,171 $69,217 $88,171 $87,308 $84,600 $78,324 $69,217
T otal earning assets (4) 157,333 121,806 157,333 153,745 145,052 130,172 121,806
T otal assets (4) 167,187 128,388 167,187 163,011 155,666 138,576 128,388 T otal deposits 158,227 118,972 158,227 154,174 144,865 130,533 118,972
C lient assets (5)
A ssets under management $589,459 $566,267 $589,459 $607,521 $643,531 $709,955 $566,267C lient brokerage assets (6) 210,701 213,711 210,701 213,743 222,661 217,916 213,711 A ssets in custody 156,530 109,360 156,530 158,486 167,575 158,756 109,360 Less: C lient brokerage assets and assets in custody included in assets under managem (89,234) (80,784) (89,234) (88,755) (87,071) (87,386) (80,784)
T otal net c lient assets $867,456 $808,554 $867,456 $890,995 $946,696 $999,241 $808,554
(1) G lobal W ealth and Investment Management services clients through three primary businesses: U .S. T rust, Bank of America Private W ealth Management (U.S. T rust), C olumbia Management, and Premier Banking and Investments. In addition, ALM/O ther primarily includes the results of ALM activities. (2) In J uly 2007, the operations of the acquired U.S. T rust C orporation were combined with the former Private Bank to create U.S. T rust, Bank of America Private W ealth
(3) Fully taxable-equivalent basis(4) Total earning assets and total assets include asset allocations to match liabilities (i.e., deposits).(5) In December 2007, the C orporation completed the sale of Marsico C apital Management, LLC (Marsico). Total assets under management for the third and second quarters of 2007 include assets under management that were managed prior to the sale of Marsico of $59.5 billion (including $5.3 billion in eliminations) and $53.7 billion (including $5.2 billion in eliminations). Prior period Marsico business results have been transferred to All O ther to better facilitate period-over-period comparisons. (6) C lient brokerage assets include non-discretionary brokerage and fee-based assets.
C ertain prior period amounts have been reclassified among the segments to conform to the current period presentation.
Six Months E ndedJ une 30
Management. The results of the combined business were reported for periods beginning on J uly 1, 2007. Prior to J uly 1, 2007, the results solely reflect that of the former P rivate Bank.
76
Global Wealth and Investment Management Business Results
(Dollars in millions)
PremierC olumbia Banking and A LM/
Total U .S. T rust (1) Management Investments (2) O ther
Net interest income (3)$2,131 $582 $(3) $1,071 $481
Noninterest income:Investment and brokerage services 2,176 766 801 521 88 A ll other income (loss) (106) 33 (254) 114 1
T otal noninterest income 2,070 799 547 635 89 T otal revenue, net of interest expense 4,201 1,381 544 1,706 570
Provision for credit losses 362 9 - 353 - Noninterest expense 2,556 962 607 891 96
Income (loss) before income taxes 1,283 410 (63) 462 474 Income tax expense (benefit) (3)
481 152 (23) 171 181 Net income (loss) $802 $258 $(40) $291 $293
Net interest yield (3)2.82 % 2.36 % n/m 1.84 % n/m
Return on average equity 13.82 11.36 (11.40) % 29.92 n/m
Efficiency ratio (3)60.84 69.61 n/m 52.26 n/m
A verage - total loans and leases $86,607 $49,490 n/m $37,093 n/mA verage - total deposits 152,807 35,543 n/m 116,845 n/m
Period end - total assets (4)167,187 56,560 $2,819 123,359 n/m
PremierC olumbia Banking and A LM/
T otal U .S. T rust (1) Management Investments (2) O ther
Net interest income (3)$1,871 $449 $1 $1,331 $90
Noninterest income:Investment and brokerage services 1,669 480 654 460 75 A ll other income 130 24 26 70 10
T otal noninterest income 1,799 504 680 530 85 T otal revenue, net of interest expense 3,670 953 681 1,861 175
Provision for credit losses 9 9 - - - Noninterest expense 1,967 617 477 834 39
Income before income taxes 1,694 327 204 1,027 136 Income tax expense (3)
627 121 75 380 51 Net income $1,067 $206 $129 $647 $85
Net interest yield (3)3.16 % 2.73 % n/m 2.83 % n/m
Return on average equity 24.51 28.33 54.66 % 81.05 n/m
Efficiency ratio (3)53.59 64.83 70.05 44.79 n/m
A verage - total loans and leases $66,907 $33,192 n/m $33,703 n/mA verage - total deposits 116,614 21,673 n/m 94,908 n/m
Period end - total assets (4)128,388 35,102 $1,443 98,464 n/m
(1) In J uly 2007, the operations of the acquired U.S. T rust C orporation were combined with the former Private Bank to create U.S. T rust, Bank of America Private W ealth
(2) For the six months ended J une 30, 2008 and 2007, a total of $12.6 billion and $6.4 billion of deposits were migrated to G lobal W ealth and Investment Management from G lobal C onsumer and Small Business Banking.(3) Fully taxable-equivalent basis(4) T otal assets include asset allocations to match liabilities (i.e., deposits).n/m = not meaningful
C ertain prior period amounts have been reclassified among the segments to conform to the current period presentation.
Management. T he results of the combined business were reported for periods beginning on J uly 1, 2007. Prior to J uly 1, 2007, the results solely reflect that of the former Private Bank.
Six Months Ended J une 30, 2007
Six Months Ended J une 30, 2008
77
Global Wealth and Investment Management –Key Indicators
(Dollars in millions, except as noted)
Second First Fourth T hird SecondQ uarter Q uarter Q uarter Q uarter Q uarter
2008 2007 2008 2008 2007 2007 2007
Investment and Brokerage Serv ices
U.S. T rust (1)
A sset management fees $742 $466 $374 $368 $378 $356 $245Brokerage income 24 14 13 11 8 8 8
Total $766 $480 $387 $379 $386 $364 $253
C olumbia ManagementA sset management fees $799 $652 $402 $397 $401 $378 $334Brokerage income 2 2 1 1 - 1 1
Total $801 $654 $403 $398 $401 $379 $335
Premier Banking and InvestmentsA sset management fees $172 $139 $84 $88 $81 $81 $73Brokerage income 349 321 179 170 165 162 167
Total $521 $460 $263 $258 $246 $243 $240
A LM/O therA sset management fees $88 $75 $42 $46 $47 $46 $35Brokerage income - - - - - - -
Total $88 $75 $42 $46 $47 $46 $35
Total G lobal Wealth and Investment ManagementA sset management fees $1,801 $1,332 $902 $899 $907 $861 $687Brokerage income 375 337 193 182 173 171 176
Total investment and brokerage services $2,176 $1,669 $1,095 $1,081 $1,080 $1,032 $863
A ssets Under Management (2, 3)
A ssets under management by business:U .S. T rust (1) $210,969 $144,054 $210,969 $214,526 $225,209 $225,297 $144,054C olumbia Management 422,827 453,092 422,827 409,064 439,053 511,996 453,092
Retirement and G W IM C lient Solutions 45,907 27,043 45,907 48,655 42,814 44,512 27,043 P remier Banking and Investments 22,404 22,183 22,404 21,600 22,915 21,392 22,183 E liminations (4) (113,001) (81,653) (113,001) (86,760) (87,085) (94,255) (81,653) International W ealth Management 353 1,548 353 436 625 1,013 1,548
Total assets under management $589,459 $566,267 $589,459 $607,521 $643,531 $709,955 $566,267
A ssets under management rollforw ard:Beginning balance $643,531 $542,977 $607,521 $643,531 $709,955 $566,267 $547,448Net flows (18,876) 9,431 (12,611) (6,265) (2,226) 18,066 7,763Market valuation/other (35,196) 13,859 (5,451) (29,745) (64,198) 125,622 11,056
Ending balance $589,459 $566,267 $589,459 $607,521 $643,531 $709,955 $566,267
A ssets under management mix :Money market/other $225,887 $213,481 $225,887 $242,956 $246,213 $246,748 $213,481Fixed income 107,687 83,425 107,687 107,365 111,217 109,117 83,425E quity 255,885 269,361 255,885 257,200 286,101 354,090 269,361
Total assets under management $589,459 $566,267 $589,459 $607,521 $643,531 $709,955 $566,267
C lient Brokerage A ssets $210,701 $213,711 $210,701 $213,743 $222,661 $217,916 $213,711
Premier Banking and Investments Metrics
C lient facing associatesNumber of client managers 2,538 2,498 2,538 2,572 2,548 2,505 2,498 Number of financial advisors 1,974 1,888 1,974 1,952 1,950 1,847 1,888 A ll other 1,086 1,094 1,086 1,157 1,079 1,020 1,094
Total c lient facing associates 5,598 5,480 5,598 5,681 5,577 5,372 5,480
F inancial A dvisor Productiv ity (5) (in thousands) $239 $216 $121 $118 $113 $116 $114
Total c lient balances (6) $308,174 $292,455 $308,174 $309,687 $309,190 $299,275 $292,455
Number of Households w ith Banking and Brokerage Relationships (in thousands ) 288 256 288 283 277 267 256
U.S. Trust Metrics (1)
Client facing associates 3,882 2,031 3,882 3,922 3,989 3,776 2,031
Total client balances (6) $357,575 $227,086 $357,575 $362,425 $380,687 $360,864 $227,086
Columbia Management Performance Metrics
# of 4 or 5 Star Funds by Morningstar 50 40 50 50 48 47 40
% of Assets Under Management in 4 or 5 Star Rated Funds (7) 64 % 51 % 64 % 69 % 68 % 55 % 51 %
(1) In July 2007, the operations of the acquired U.S. Trust Corporation were combined with the former Private Bank to create U.S. Trust, Bank of America Private Wealth Management. The results of the combined business were reported for periods beginning on July 1, 2007. Prior to July 1, 2007, the results solely reflect that of the former Private Bank.
(3) In December 2007, the Corporation completed the sale of Marsico. Total assets under management for the third and second quarters of 2007 include assets under management that were managed prior to the sale of Marsico of $59.5 billion (including $5.3 billion in eliminations) and $53.7 billion (including $5.2 billion in eliminations). Prior period Marsico business results have been transferred to All Other to better facilitate period-over-period comparisons.
Certain prior period amounts have been reclassified among the segments to conform to the current period presentation.
(2) The acquisition of LaSalle Bank Corporation contributed $7.5 billion to assets under management in fourth quarter 2007. The acquisition of U.S. Trust Corporation contributed $115.6 billion to assets under management in third quarter 2007. The sale of Marsico resulted in a $60.9 billion decrease in assets under management in fourth quarter 2007 (including a $5.3 billion reduction in eliminations).
(4) The elimination of assets under management that are managed by two lines of business.(5) Financial advisor productivity is defined as full service gross production divided by average number of total financial advisors.(6) Client balances are defined as deposits, assets under management, client brokerage assets and other assets in custody.(7) Results shown are defined by Columbia Management’s calculation using Morningstar’s Overall Rating criteria for 4 & 5 star rating. The assets under management of the Columbia Funds that
Six Months E ndedJ une 30
had a 4 & 5 star rating were totaled then divided by the assets under management of all the funds in the ranking.
78
All Other(1)
(Dollars in millions)
Second First Fourth T hird SecondQ uarter Q uarter Q uarter Q uarter Q uarter
2008 2007 2008 2008 2007 2007 2007
Net interest income (2) $(4,017) $(3,618) $(2,035) $(1,982) $(2,042) $(1,986) $(1,883)Noninterest income:
C ard income 1,259 1,397 595 664 680 739 676 Equity investment income 978 2,615 710 268 278 852 1,719 G ains on sales of debt securities 351 63 131 220 110 7 2 A ll other income (loss) (355) (101) (101) (254) 754 (219) (147)
T otal noninterest income 2,233 3,974 1,335 898 1,822 1,379 2,250T otal revenue, net of interest expense (1,784) 356 (700) (1,084) (220) (607) 367
Provision for credit losses (3) (2,408) (2,626) (1,197) (1,211) (1,294) (1,290) (1,313) Merger and restructuring charges 382 186 212 170 140 84 75 A ll other noninterest expense 130 361 17 113 (21) (232) (50)
Income (loss) before income taxes 112 2,435 268 (156) 955 831 1,655 Income tax expense (benefit) (2) 51 741 (11) 62 127 210 584
Net income (loss) $61 $1,694 $279 $(218) $828 $621 $1,071
Balance sheet
A verageT otal loans and leases $95,248 $96,672 $88,251 $102,245 $106,431 $104,058 $101,093T otal earning assets 268,221 209,074 265,063 269,974 279,037 238,210 213,791 T otal assets 345,202 262,752 344,216 344,784 345,219 286,645 265,902 T otal deposits 56,417 34,332 52,945 59,887 66,271 35,480 31,979
Period endT otal loans and leases $73,130 $107,429 $73,130 $96,472 $107,580 $102,002 $107,429T otal earning assets 258,314 219,582 258,314 251,451 261,534 248,521 219,582 T otal assets 343,988 270,910 343,988 344,306 340,807 300,406 270,910 T otal deposits 58,622 31,693 58,622 59,515 68,676 35,977 31,693
(1) All O ther consists of equity investment activities including Principal Investing, C orporate Investments and Strategic Investments, the residual impact of the allowance for credit losses and the cost allocation processes, merger and restructuring charges, intersegment eliminations, and the results of certain businesses that are expected to be or have been sold or are in the process of being liquidated. A ll O ther also includes certain amounts associated with ALM activities, including the residual impact of funds transfer pricing allocation methodologies, amounts associated with the change in the value of derivatives used as economic hedges of interest rate and foreign exchange rate fluctuations that do not qualify for SFAS No. 133 “Accounting for Derivative instruments and Hedging Activities, as amended” hedge accounting treatment, foreign exchange rate fluctuations related to SFAS No. 52, "Foreign C urrency T ranslation" revaluation of foreign-denominated debt issuances, certain gains (losses) on sales of whole mortgage loans, and gains (losses) on sales of debt securities. All O ther also includes adjustments to noninterest income and income tax expense to remove the FTE impact of items (primarily low-income housing tax credits) that have been grossed up within noninterest income to a FTE amount in the business segments. In addition, All O ther includes the offsetting securitization impact to present G lobal C onsumer and Small Business Banking on a managed basis. (See Exhibit A: Non-G AAP Reconciliations - A ll O ther - Reconciliation on page 47).(2) Fully taxable-equivalent basis(3) Provision for credit losses represents the provision for credit losses in All O ther combined with the G lobal C onsumer and Small Business Banking securitization offset.
C omponents of Equity Investment Income(Dollars in millions)
Second First Fourth T hird SecondQ uarter Q uarter Q uarter Q uarter Q uarter
2008 2007 2008 2008 2007 2007 2007
Principal Investing $308 $1,825 $296 $12 $117 $275 $1,250C orporate Investments 144 340 112 32 (7) 112 150Strategic and other investments 526 450 302 224 168 465 319
T otal equity investment income included in A ll O ther 978 2,615 710 268 278 852 1,719
T otal equity investment income included in the business segments 668 228 (118) 786 39 52 110
Total consolidated equityinvestment income $1,646 $2,843 $592 $1,054 $317 $904 $1,829
C ertain prior period amounts have been reclassified among the segments to conform to the current period presentation.
Six Months EndedJ une 30
Six Months EndedJ une 30
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Private Equity Investments Group
Private Equity Investments (PEI) is a diversified private equity investor, providing equity capital to companies at all stages of the business cycle – from startup to buyout. PEI is the primary provider of private equity capital for Bank of America Corporation (BAC).
PEI is divided into three business groups: Banc of America Capital Access Funds, Banc of America Capital Investors and Banc of America Strategic Investments Group.
•Banc of America Capital Access Funds (“BACAF”) makes investments in qualified private equity funds seeking to invest in domestic underserved markets. BACAF invests in venture capital, growth, buyout and mezzanine funds.
•Banc of America Capital Investors (“BACI”)1 is a private equity and equity-linked junior capital partnership that manages capital for Bank of America. BACI’s partnership is focused on the Bank of America franchise for sourcing opportunities and providing capital for growth financings, buyouts, acquisitions and recapitalizations.
•Banc of America Strategic Investments Group (“SIG”) originates, structures and executes direct equity investments and investments in private equity and hedge funds that are a strategic priority for Bank of America. SIG also manages stock, warrants and other forms of equity received by Bank of America in restructurings or workouts of corporate loans. SIG’s focus spans the Bank of America enterprise.
