Bank of America 2005 Annual Report Download

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1 Bank of America 2005
A key part of how we grow at
Bank of America is our associates’
commitment to customer
satisfaction and sales at our
more than 5,800 banking centers
nationwide, including the Clark
& Madison Banking Center in
the heart of Chicago’s fi nancial
district, managed by Sandy Pierce
and her team. 2005 Summary Annual Report
How We Grow

Table of contents

  • Page 1
    ... is our associates' commitment to customer satisfaction and sales at our more than 5,800 banking centers nationwide, including the Clark & Madison Banking Center in the heart of Chicago's financial district, managed by Sandy Pierce and her team. 2005 Summary Annual Report 1 Bank of America 2005

  • Page 2
    ...how we grow at Bank of America is our associates' commitment to customer satisfaction and sales at our more than 5,800 banking centers nationwide, including the Clark & Madison Banking Center in the heart of Chicago's financial district, managed by Sandy Pierce and her team. 1 Bank of America 2005

  • Page 3
    ... Small Business Banking $28,876 51% 2005 Net Income (in millions) Global Business and Financial Services $4,562 28% At year end Total assets Total loans and leases Total deposits Total shareholders' equity Book value per common share Market price per share of common stock Common shares issued and...

  • Page 4
    ...our acquisition of MBNA Corp. closed on Jan. 1, 2006, making Bank of America the top provider of debit and credit cards in the United States. Our view is that there are many paths to growth, and the best companies pursue multiple strategies as market conditions change and opportunities arise. I will...

  • Page 5
    ... Management; Liam E. McGee, president, Global Consumer and Small Business Banking; and R. Eugene Taylor, president, Global Corporate and Investment Banking, at the Bank of America Corporate Center in Charlotte. for customers and shareholders in the articles that follow. First, a review of our key...

  • Page 6
    ... taxable-equivalent basis) (in billions) Net Income (in billions) Earnings per Common Share (Diluted) Return on Average Tangible Common Shareholders' Equity (Fully taxable-equivalent basis) We also consider our long-term view of the changing marketplace; the competitive landscape; whether the...

  • Page 7
    ... systems conversions across all our lines ture, which helps customers save by rounding up debit card purchase amounts and moving the change to a linked savings account. And we launched our SiteKeyâ„¢ online security feature, which has won several awards. Our wealth management business introduced...

  • Page 8
    ... for their trust and all our associates and directors for the work they do for our company. I look forward to even greater achievements in the year ahead and, as always, I welcome your thoughts and suggestions. CHAIRMAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT MARCH 16, 2006 Bank of America 2005 7

  • Page 9
    ... credit card portfolio, including increased bankruptcy filings, and a lower provision benefit from the commercial portfolio as the rate of improvement in credit quality slowed. Capital Management: For 2005, Bank of America paid $7.7 billion in cash dividends to common shareholders. The company also...

  • Page 10
    ... value across divisions and businesses. Growing through serving our communities-investing and giving to build stronger neighborhoods. This annual report contains stories of how we grow. And of how we plan to keep growing. A s we build on our long history of growth, Bank of America is positioned to...

  • Page 11
    ... Execute processes and programs that encourage diversity in leadership More than 1,000 of our top performers annually participate in Leadership Forums designed to address some of our most critical business issues. Bank of America chairman, CEO and president Ken Lewis and his senior management team...

  • Page 12
    ... C. Brazle, co-chair, the bank's Black Professionals Group; and Jose L. Garcia, national committee member of the bank's Hispanic/Latino Organization for Leadership and Advancement. Bank of America values a diversity of ideas and talent as part of its training and leadership development processes.

  • Page 13
    ...combination with special customer-service training for our associates has transformed Bank of America's collections and fraud protection activities into a loyalty-building program that helps customers manage troublesome debt and protect their accounts by identifying and preventing credit card fraud...

  • Page 14
    ... provider in Northern California. Soon after signing up to pay bills online in 2005 to save time, Bertagnolli joined the Keep the Change program and also opened a savings account online. Each online customer is a candidate for buying a new product. With 1.6 billion site visits annually and a ranking...

  • Page 15
    ... Market Banking executive, Northeast Commercial Banking, are part of the Bank of America team that is growing sales and customer satisfaction in the Northeast. Effectively integrating Fleet Merger creates new opportunities, boosts customer satisfaction and improves sales B ank of America in 2005...

  • Page 16
    ... Bank of America systems, merger in 2003, we said our 2.4 million debit cards the bank added 11,000 net combined company would • Consolidated 455 deposit products into new checking accounts in deliver more financial sera simpler offering of 55 products the new markets, increased vice capabilities...

  • Page 17
    ... service, any Bank of America customer with a checking account can send cash to anyone in Mexico- immediately and free of charge. The SafeSend service provides cash in Mexican pesos, at competitive exchange rates, to recipients in Mexico through more than 3,600 locations. In 2006, the bank will add...

  • Page 18
    Business owners Juan and Maria Cuarenta, pictured here with some of their children and grandchildren, use SafeSend regularly to transfer funds to relatives in Mexico.

  • Page 19
    ... cash than they had imagined was there. When customers enroll, every debit card purchase they make is automatically rounded up to the next dollar and the difference-"the change"-is transferred from checking to savings. Bank of America matches 100 percent of the Keep the Change program deposits...

  • Page 20
    ...service. It is just one example of our discipline and effectiveness in managing risk for customers and shareholders. Maintaining customer confidence in e-commerce is a top priority. Online customers generally keep higher balances and are more likely to stay with Bank of America. In 2005, the number...

  • Page 21
    ... in China. It is China's largest mortgage lender and has leading positions in credit cards and infrastructure loans. Bank of America bought approximately 9 percent of China Construction Bank stock for $3 billion. Under the terms of the seven-year agreement, it has the option of increasing that...

  • Page 22
    Bank of America Global Corporate Planning and Strategy executive Gregory L. Curl, left, with China Construction Bank chairman Guo Shuqing in Hangzhou, China. The two leaders are exploring new joint venture opportunities that support the companies' mutual business interests. 21 Bank of America 2005

  • Page 23
    ... marketing. MBNA has a history of customer focus, having been the first credit card issuer to offer 24-hour service. To this we add our leading online banking capabilities, dominant distribution channels and efficient lending processes. The MBNA acquisition makes Bank of America the largest credit...

  • Page 24
    ... 2005, Bank of America began to extend its wealth transfer and estate planning services to clients of Premier Banking and Investments, such as Dr. Arthur and Carla Silver, of Atlanta. with us as their account balances tend to rise. One example of how the initiative is working involves a commercial...

  • Page 25
    ... market. Various teams worked together to develop this highly complex financing plan to minimize the cost for the client and maximize both earnings per share and return on equity. The success of the MetLife deal highlights the effectiveness of the bank's ability to provide 24 Bank of America 2005

  • Page 26
    ...the third-largest of any kind. From left, dealmakers Karim Assef, managing director, Banc of America Securities; Matthew Levin, managing director, Bain Capital Partners, LLC; and Michael Fascitelli, president, Vornado Realty Trust, at Toys "R" Us at Times Square in New York. 25 Bank of America 2005

  • Page 27
    ... theater, multimedia room, computer center, meeting space, exercise facility and library. Bank of America partnered with The Home Association of Tampa, which guides the center's programming with their decades-long experience in helping neighborhood seniors. The development is located How we grow by...

  • Page 28
    ..., from left, Oscar Morales, Richard Yaderia and Bernard Silver look on. The Centro Place Apartments in Tampa, FL, were restored in partnership with Banc of America Community Development Corp. Bank of America 2005 27

  • Page 29
    ... with the monthly preparation of more than 1.7 million statements, gaining practical experience. These individuals inspire our Tempebased check processing associates every day by proving that anyone can overcome a challenge and be successful in a company that values merit. 28 Bank of America 2005

  • Page 30
    ... development on Chicago's Southwest Side. "The Bank of America Neighborhood Excellence Initiative is open-minded, takes chances with newer organizations and invests capital and other resources at critical points during development using nonconventional criteria," says Garcia. Bank of America 2005...

  • Page 31
    ... capital-raising solutions and advisory services, as well as traditional bank deposit and loan products, cash management and payment services. Investor clients are served through equity and debt research, secondary trading capabilities and financing activities in fixed income and equity markets...

  • Page 32
    ..., Inc. Raleigh, NC Meredith R. Spangler Trustee and Board Member C.D. Spangler Construction Company Charlotte, NC Robert L. Tillman Chairman and CEO Emeritus Lowe's Companies, Inc. Mooresville, NC Jackie M. Ward Outside Managing Director Intec Telecom Systems PLC Atlanta, GA Bank of America 2005 31

  • Page 33
    ... manager, Investor Relations, at 1.704.3.670. Visit the Investor Relations area of the Bank of America Web site, http://investor.bankofamerica.com, for stock and dividend information, financial news releases, links to Bank of America SEC filings, electronic versions of our annual reports and...

  • Page 34
    © 2006 Bank of America Corporation 00-04-1354B 3/2006 s Recycled Paper

  • Page 35
    ... America Corporate Center 100 N. Tryon Street Charlotte, North Carolina (Address of Principal Executive Offices) (Zip Code) 28255 Registrant's telephone number, including area code (704) 386-5681 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Title of each class Name of each exchange...

  • Page 36
    ...the June 30, 2005 closing price of Common Stock of $45.61 per share as reported on the New York Stock Exchange). As of March 13, 2006, there were 4,648,802,068 shares of Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Document of the Registrant Form 10-K Reference Locations Portions of...

  • Page 37
    ... under the Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended (SFAS 133). The Corporation is presenting this restatement in its 2005 Annual Report on Form 10-K. The restatement has the following impact on Net Income and...

  • Page 38
    ..., New Jersey and Washington. In addition, the Corporation ranks second in terms of bank deposit market share in Arizona, Delaware, Kansas, Missouri, New Mexico, North Carolina, Rhode Island, South Carolina and Texas; third in Arkansas, District of Columbia, Georgia and Maine; fourth in Idaho, New...

  • Page 39
    ...if the payment would cause the issuing bank's risk-based capital ratio to fall or remain below the required minimum. The sum of Tier 1 and Tier 2 capital less investments in unconsolidated subsidiaries represents the Corporation's qualifying total capital. Risk-based capital ratios are calculated by...

  • Page 40
    ... which offer financial services, located both domestically and internationally and through alternative delivery channels such as the Internet. The methods of competition center around various factors, such as customer services, interest rates on loans and deposits, lending limits and customer...

  • Page 41
    ... files such material with, or furnishes it to the Securities and Exchange Commission (the "SEC"). In addition, the Corporation makes available on its website at http://investor.bankofamerica.com under the heading Corporate Governance its: (i) Code of Ethics and Insider Trading Policy; (ii) Corporate...

  • Page 42
    ... intensified competition as continued merger activity in the financial services industry produces larger, better-capitalized companies that are capable of offering a wider array of financial products and services, and at more competitive prices. In addition, technological advances and the growth of...

  • Page 43
    ... loans, deposits, securities, short-term borrowings, long-term debt, trading account assets and liabilities, and derivatives. Just a few of the market conditions that may shift from time to time, thereby exposing us to market risk, include fluctuations in interest and currency exchange rates, equity...

  • Page 44
    ... of our risk management policies and procedures, see "Managing Risk" in the MD&A. We operate many different businesses. We are a diversified financial services company. In addition to banking, we provide investment, mortgage, investment banking, credit card and consumer finance services. Although we...

  • Page 45
    ... As of December 31, 2005, the principal offices of the Corporation and primarily all of its business segments were located in the 60-story Bank of America Corporate Center in Charlotte, North Carolina, which is owned by a subsidiary of the Corporation. The Corporation occupies approximately 612,000...

  • Page 46
    ... Financial Services and Investment Management from May 2003. He first became an officer in 1993. He also serves as President, Global Wealth and Investment Management and a director of Bank of America, N.A., MBNA America Bank, N.A., MBNA America (Delaware), N.A. and Bank of America, N.A. (USA...

  • Page 47
    ... Stock Exchange and the Pacific Stock Exchange, and certain shares are listed on the Tokyo Stock Exchange. The following table sets forth the high and low closing sales prices of the Common Stock on the New York Stock Exchange for the periods indicated: Quarter High Low Bank of America Corporation...

  • Page 48
    ...Accounting for Derivative Instruments and Hedging Activities, as amended" (SFAS 133). The Corporation is presenting this restatement in its 2005 Annual Report on Form 10-K. The Corporation uses interest rate contracts and foreign exchange contracts in its Asset and Liability Management (ALM) process...

  • Page 49
    .... (2) The Corporation provided unaudited financial information relating to 2005 in its current report on Form 8-K filed on January 23, 2006. Increase (Decrease) in Quarterly Net Income(1, 2) (Dollars in millions) As Previously Reported Net income ...Internal fair value hedges ...Internal cash flow...

  • Page 50
    ...758 $ $ 3.62 3.55 (1) The Corporation provided unaudited financial information relating to 2005 in its current report on Form 8-K filed on January 23, 2006. The impact of the restatement on our Consolidated Statement of Income was to reverse previously applied hedge accounting for affected hedging...

  • Page 51
    Bank of America Corporation and Subsidiaries Consolidated Balance Sheet December 31 2005 2004 As Previously As Previously Reported(1) Restated Reported Restated (Dollars in millions) Loans and leases, net of allowance for loan and lease losses ...Total assets ...Accrued expenses and other ...

  • Page 52
    ... quarter of 2005, the Corporation's Net Income decreased as the rise in rates adversely impacted the fair value of the derivative instruments. Bank of America Corporation and Subsidiaries Consolidated Balance Sheet 2005 Quarters Fourth (Dollars in millions) As Previously Reported(1) Restated Third...

  • Page 53
    ... offering. These shares are non-transferable until the third anniversary of the initial public offering. We also hold an option that allows us to increase our interest in CCB to 19.9 percent over the next five years. CCB is the third largest commercial bank in China based on total assets. Effective...

  • Page 54
    ... for Credit Losses partially offset by higher Trading Account Profits, Equity Investment Gains, and Investment and Brokerage Services Income. For more information on Global Capital Markets and Investment Banking, see page 35. Global Wealth and Investment Management Net Income increased $783...

  • Page 55
    ... discount fees driven by growth in debit and credit purchase volumes and the acquisition of NPC. • Trading Account Profits increased $943 million due to increased customer activity driven by our strategic initiative in Global Capital Markets and Investment Banking to expand business capabilities...

  • Page 56
    ... $70 million related to the special one-time deduction associated with the repatriation of certain foreign earnings under the American Jobs Creation Act of 2004. In 2004, Income Tax Expense was $7.0 billion, reflecting an effective tax rate of 33.3 percent. For more information on Income Tax Expense...

  • Page 57
    ...increases in various line items primarily driven by an increase in trading-related activity due to the strategic growth initiative, growth in the ALM portfolio and growth in Loans and Leases. Average Total Assets also increased due to the impact of the FleetBoston Merger. At December 31, 2005, Total...

  • Page 58
    ...related to the strategic initiative and investor client activities. Trading Account Liabilities Our Trading Account Liabilities consist primarily of short positions in fixed income securities (including government and corporate debt), equity and convertible instruments. The average balance increased...

  • Page 59
    ... ...Average balance sheet Total loans and leases ...Total assets ...Total deposits ...Long-term debt ...Common shareholders' equity ...Total shareholders' equity ...Capital ratios (at year end) Risk-based capital: Tier 1 ...Total ...Leverage ...Market price per share of common stock Closing ...High...

  • Page 60
    ... United States (GAAP). Other companies may define or calculate supplemental financial data differently. Operating Basis Presentation In managing our business, we may at times look at performance excluding certain non-recurring items. For example, as an alternative to Net Income, we view results on...

  • Page 61
    ... Merger and restructuring charges, net of tax benefit ...275 Cash basis earnings on an operating basis ...17,549 Capital charge ...(10,955) Shareholder value added ...$ 6,594 Reconciliation of return on average assets to operating return on average assets Return on average assets ...Effect of merger...

  • Page 62
    ... Global Capital Markets and Investment Banking business segment section beginning on page 35, we evaluate our trading results and strategies based on total trading-related revenue, calculated by combining trading-related Net Interest Income with Trading Account Profits. We also adjust for loans that...

  • Page 63
    ... for capital is calculated by multiplying 11 percent (management's estimate of the shareholders' minimum required rate of return on capital invested) by average total common shareholders' equity at the corporate level and by average allocated equity at the business segment level. Average equity is...

  • Page 64
    ... (losses) on sales of debt securities ...Noninterest expense ...Income before income taxes ...Income tax expense ... Net income ...Shareholder value added ...Net interest yield (FTE basis) ...Return on average equity ...Efficiency ratio (FTE basis) ... 4,013 $ 5.63% 21.31 46.54 Average: Total loans...

  • Page 65
    ... new accounts. Mortgage Banking Income increased primarily due to a $400 million decrease in the impairment of MSRs. Also impacting these increases was the impact of FleetBoston. The Provision for Credit Losses increased $938 million, or 28 percent, to $4.3 billion in 2005 mainly due to credit card...

  • Page 66
    ... on our balance sheet. This has the effect of increasing Loans and Leases and increasing Net Interest Income and the Provision for Credit Losses (including net charge-offs), with a reduction in Noninterest Income. Credit Card Services (Dollars in millions) 2005 2004 Income Statement Data Held...

  • Page 67
    ... adjustable rate loans, and home equity lines of credit. To manage this portfolio, these products are either sold into the secondary mortgage market to investors while retaining Bank of America customer relationships or are held on our balance sheet for ALM purposes. Consumer Real Estate is managed...

  • Page 68
    ...offset by a decrease in the value of the MSRs of $210 million for 2004. For additional information on MSRs, see Note 9 of the Consolidated Financial Statements. (3) Net losses on derivatives used as economic hedges of MSRs not designated as SFAS 133 hedges. (4) Includes revenue for mortgage services...

  • Page 69
    ... traditional savings accounts, money market savings accounts, CDs and IRAs, regular and interest-checking accounts, debit cards and a variety of business checking options. In 2005, we added approximately 2.3 million net new retail checking accounts and 1.9 million net new retail savings accounts...

  • Page 70
    ... offices and clearing arrangements with other financial institutions. Our clients include multinationals, middle-market companies, correspondent banks, commercial real estate firms and governments. Our services include treasury management, trade finance, foreign exchange, short-term credit...

  • Page 71
    ...... Total revenue (FTE basis) ...Provision for credit losses ...Gains on sales of debt securities ...Noninterest expense ...Income before income taxes ...Income tax expense ...Net income ...Shareholder value added ...Net interest yield (FTE basis) ...Return on average equity ...Efficiency ratio (FTE...

  • Page 72
    ... risk management solutions for customers using interest rate, equity, credit and commodity derivatives, foreign exchange, fixed income and mortgage-related products. In support of these activities, the businesses may take positions in these products and participate in market-making activities. The...

  • Page 73
    ... for credit losses ...Gains (losses) on sales of debt securities ...Noninterest expense ...Income before income taxes ...Income tax expense ...Net income ...Shareholder value added ...Net interest yield (FTE basis) ...Return on average equity ...Efficiency ratio (FTE basis) ...Average: Total loans...

  • Page 74
    ... Investment and Brokerage Services in the Consolidated Statement of Income. (4) Includes CDS and related products used for credit risk management. For additional information on CDS, see Concentrations of Commercial Credit Risk beginning on page 53. In 2005, market-based trading-related revenue was...

  • Page 75
    ... for credit losses ...Noninterest expense ...Income before income taxes ...Income tax expense ...Net income ...Shareholder value added ...Net interest yield (FTE basis) ...Return on average equity ...Efficiency ratio (FTE basis) ...Average: Total loans and leases ...Total assets ...Total deposits...

  • Page 76
    ... or losses on sales of whole mortgage loans, and Gains on Sales of Debt Securities. The objective of the funds transfer pricing allocation methodology is to neutralize the business segments from changes in interest rate and foreign exchange fluctuations. Accordingly, for segment reporting purposes...

  • Page 77
    All Other (Dollars in millions) 2005 2004 (Restated) Net interest income (FTE basis)(1) ...Noninterest income: Equity investment gains ...All other income(1) ...Total noninterest income ...Total revenue (FTE basis) ...Provision for credit losses ...Gains on sales of debt securities(1) ...Merger and...

  • Page 78
    ... access to the commercial paper markets. These markets provide an attractive, lower-cost financing alternative for our customers. Our customers sell assets, such as high-grade trade or other receivables or leases, to a commercial paper financing entity, which in turn issues high-grade short-term...

  • Page 79
    ... issued by these types of financing entities other than during the underwriting process when we act as issuing agent nor do we purchase any of the commercial paper for our own account. Derivative instruments related to these entities are marked to market through the Consolidated Statement of Income...

  • Page 80
    Other Off-balance Sheet Financing Entities To improve our capital position and diversify funding sources, we also sell assets, primarily loans, to other off-balance sheet QSPEs that obtain financing primarily by issuing term notes. We may retain a portion of the investment grade notes issued by ...

  • Page 81
    .... For example, except for trading-related business activities, interest rate risk associated with our business activities is managed in the Corporate Treasury and Corporate Investment functions. Line of business management makes and executes the business plan and is closest to the changing nature of...

  • Page 82
    ... and Corporate Investment's process of managing interest rate risk, otherwise known as the ALM process, and reviews ALM and credit hedging activities. ALCO also approves limits for trading activities and manages the risk of loss of value and related Net Interest Income of our trading activities. The...

  • Page 83
    ... actions and procedures for effectively managing through the problem period, and define roles and responsibilities. They are reviewed and approved annually by ALCO. Our borrowing costs and ability to raise funds are directly impacted by our credit ratings. The credit ratings of Bank of America...

  • Page 84
    ... to deposit ratio. Mortgage-backed securities and mortgage loans have prepayment risk which has to be actively managed. Repricing of deposits is a key variable in this process. The capital generated in excess of capital adequacy targets and to support business growth, is available for the payment of...

  • Page 85
    ... issued under our company's employee stock plans. During 2006 we expect to use available excess capital to repurchase shares in excess of shares issued under our employee stock plans. For additional information on common share repurchases, see Note 14 of the Consolidated Financial Statements. Credit...

  • Page 86
    ... payment requirements implemented in April 2004. The year 2005 compared to 2004 was also impacted by the FleetBoston credit card portfolio. The entire balance of an account is contractually delinquent if the minimum payment is not received by the specified date on the customer's billing statement...

  • Page 87
    ...to deposit growth and a change in the fourth quarter of 2005 in our charge-off policy for overdraft balances from 120 days to 60 days. Net losses for the managed credit card portfolio increased $1.3 billion to $4.1 billion, or 6.92 percent of total average managed credit card loans in 2005, compared...

  • Page 88
    ... ...Total foreclosed properties, December 31 ... Nonperforming consumer assets, December 31 ... (1) Consumer loans are generally returned to performing status when principal or interest is less than 90 days past due. (2) Our policy is not to classify consumer credit card and consumer non-real estate...

  • Page 89
    ... of credit exposure by industry, product, geography and customer relationship. Distribution of loans and leases by loan size is an additional measure of the portfolio risk diversification. We also review, measure, and manage commercial real estate loans by geographic location and property type. In...

  • Page 90
    ... real estate industry is defined based upon the borrowers' or counterparties' primary business activity using operating cash flow and primary source of repayment as key factors. (4) Represents net CDS index positions, which were principally investment grade. Indices are comprised of corporate credit...

  • Page 91
    ...our net credit default protection portfolio by credit exposure debt rating at December 31, 2005 and 2004. Table 15 Net Credit Default Protection by Credit Exposure Debt Rating (Dollars in millions) Ratings AAA ...AA ...A...BBB ...BB ...B...CCC and below ...NR(1) ...Total ...December 31 2005 2004 Net...

  • Page 92
    .... Table 16 Outstanding Commercial Real Estate Loans (Dollars in millions) December 31 2005 2004 By Geographic Region(1) California ...Northeast ...Florida ...Southeast ...Southwest ...Midwest ...Northwest ...Midsouth ...Other ...Geographically diversified(2) ...Non-U.S...Total ... $ 7,615 6,337...

  • Page 93
    ...our foreign offices as follows: loans, accrued interest receivable, acceptances, time deposits placed, trading account assets, securities, derivative assets, other interest-earning investments and other monetary assets. Amounts also include unused commitments, SBLCs, commercial letters of credit and...

  • Page 94
    ... Markets(1) Loans and Total Leases, and Securities/ CrossLoan Other Derivative Other border Commitments Financing(2) Assets(3) Investments(4) Exposure(5) Local Country Total Increase/ Exposure Foreign (Decrease) Net of Exposure from Local December 31, December 31, (6) Liabilities 2005 2004 (Dollars...

  • Page 95
    ... and media. These decreases were partially offset by $7.2 billion of newly criticized exposure. Global Business and Financial Services accounted for 54 percent, or $1.5 billion, of the decrease in commercial criticized exposure centered in Commercial Aviation, Latin America and Middle Market Banking...

  • Page 96
    ... Commercial Assets (Dollars in millions) 2005 2004 December 31 2003 2002 2001 Nonperforming commercial loans and leases Commercial-domestic ...Commercial real estate ...Commercial lease financing ...Commercial-foreign ...Total nonperforming commercial loans and leases(1) ...Nonperforming securities...

  • Page 97
    ......New nonaccrual loans and leases ...Advances ... Reductions in nonperforming loans and leases: Paydowns and payoffs ...Sales ...Returns to performing status(1) ...Charge-offs(2) ...Transfers to loans held-for-sale ...Transfers to foreclosed properties ...Total net reductions in nonperforming loans...

  • Page 98
    ...Credit Losses. In addition, the Provision for Credit Losses was impacted by new advances on accounts for which previous loan balances were sold to the securitization trusts, and the establishment of reserves in 2005 for additional changes made in late 2005 in credit card minimum payment requirements...

  • Page 99
    ... on the Consolidated Balance Sheet. We monitor differences between estimated and actual incurred credit losses upon draws of the commitments. This monitoring process includes periodic assessments by senior management of credit portfolios and the models used to estimate incurred losses in those...

  • Page 100
    ... mortgage ...Credit card ...Home equity lines ...Direct/Indirect consumer ...Other consumer ...Total consumer ...Commercial-domestic ...Commercial real estate ...Commercial lease financing ...Commercial-foreign ...Total commercial ...Total recoveries of loans and leases previously charged off ...Net...

  • Page 101
    ...(Dollars in millions) Allowance for loan and lease losses Residential mortgage ...Credit card ...Home equity lines ...Direct/Indirect consumer ...Other consumer ...Total consumer ...Commercial-domestic ...Commercial real estate ...Commercial lease financing ...Commercial-foreign ...Total commercial...

  • Page 102
    ... and default risks on the market value of the trading portfolio with the use of CDS, and credit fixed income and similar securities. Trading Risk Management Trading-related revenues represent the amount earned from our trading positions, which include trading account assets and liabilities, as well...

  • Page 103
    ... by general market conditions and customer demand. Trading Account Profits are dependent on the volume and type of transactions, the level of risk assumed, and the volatility of price and rate movements at any given time within the ever-changing market environment. The histogram of daily revenue or...

  • Page 104
    The following graph shows actual losses did not exceed VAR in 2005. 68

  • Page 105
    ..., Real estate/mortgage no longer includes the Certificates. For additional information on the Certificates, see Note 1 of the Consolidated Financial Statements. (4) Total market-based trading portfolio excludes CDS used for credit risk management, net of the effect of diversification. The increase...

  • Page 106
    ...due to increased funding costs. Conversely, we would benefit from falling rates or a steepening of the yield curve beyond what is already implied in the forward curve. As part of the ALM process, we use securities, residential mortgages, and interest rate and foreign exchange derivatives in managing...

  • Page 107
    ... our ALM process and serve as an efficient tool to mitigate our risk. We use derivatives to hedge the changes in cash flows or market values of our balance sheet. See Note 5 of the Consolidated Financial Statements for additional information on our hedging activities. Our interest rate contracts are...

  • Page 108
    ... of increases in interest rates during 2005 on long futures and forward rate contracts. Table 29 Asset and Liability Management Interest Rate and Foreign Exchange Contracts December 31, 2005 (Dollars in millions, average estimated duration in years) Fair Value Total 2006 Expected Maturity 2007 2008...

  • Page 109
    The Corporation uses interest rate and foreign exchange rate derivative instruments to hedge the variability in the cash flows of its variable rate assets and liabilities, and other forecasted transactions (cash flow hedges). The net losses on both open and closed derivative instruments recorded in ...

  • Page 110
    ... corporatewide risk management practices, such as an information security program and a supplier program to ensure suppliers adopt appropriate policies and procedures when performing work on behalf of the Corporation. These specialized groups also assist the lines of business in the development and...

  • Page 111
    ...based on limited available market information and other factors, principally from reviewing the issuer's financial statements and changes in credit ratings made by one or more rating agencies. At December 31, 2005, $4.9 billion, or four percent, of Trading Account Assets were fair valued using these...

  • Page 112
    ... taxes, reported as a component of Accrued Expenses and Other Liabilities on our Consolidated Balance Sheet, represents the net amount of current income taxes we expect to pay to or receive from various taxing jurisdictions attributable to our operations to date. We currently file income tax returns...

  • Page 113
    ... of securities and whole loan mortgages), the impact of higher rates, growth in consumer loan levels (primarily credit card and home equity) and higher core deposit funding levels. Partially offsetting these increases were reductions in the large corporate and foreign loan balances, lower trading...

  • Page 114
    ... of accounts, and new advances on accounts for which previous loan balances were sold to the securitization trusts. Also contributing to the consumer provision was the establishment of reserves for changes made to card minimum payment requirements. Gains on Sales of Debt Securities Gains on Sales of...

  • Page 115
    ... with the change in the fair value derivatives used as economic hedges of interest and foreign exchange rate fluctuations that do not qualify for SFAS 133 hedge accounting. Provision for Credit Losses increased $43 million, or 14 percent. Gains on Sales of Debt Securities increased $675 million...

  • Page 116
    ... Rates-FTE Basis 2005 Average Balance Interest Income/ Yield/ Expense Rate 2004 (Restated) Average Balance Interest Income/ Yield/ Expense Rate 2003 (Restated) Interest Average Income/ Yield/ Balance Expense Rate (Dollars in millions) Earning assets Time deposits placed and other short-term...

  • Page 117
    ...Rate Change From 2003 to 2004 (Restated) Due to Change in(1) Net Volume Rate Change (Dollars in millions) Increase (decrease) in interest income Time deposits placed and other short-term investments ...Federal funds sold and securities purchased under agreements to resell ...Trading account assets...

  • Page 118
    ... other consumer, commercial-foreign and commercial real estate loans. Table IV Short-term Borrowings 2005 (Dollars in millions) Amount Rate 2004 (Restated) Amount Rate 2003 (Restated) Amount Rate Federal funds purchased At December 31 ...Average during year ...Maximum month-end balance during year...

  • Page 119
    Table VI Non-exchange Traded Commodity Contract Maturities December 31, 2005 Asset Liability Positions Positions $ 4,295 3,798 373 191 8,657 (5,636) $ 4,190 3,196 441 88 7,915 (5,636) (Dollars in millions) Maturity of less than 1 year ...Maturity of 1-3 years ...Maturity of 4-5 years ...Maturity in...

  • Page 120
    ... common shareholders' equity equals net income available to common shareholders plus amortization of intangibles, divided by average common shareholders' equity less goodwill, core deposit intangibles and other intangibles. (2) The Corporation provided unaudited financial information relating to...

  • Page 121
    ... Trading account assets ...139,441 Securities ...221,411 Loans and leases(1): Residential mortgage ...178,764 Credit card ...56,858 Home equity lines ...60,571 Direct/Indirect consumer ...47,181 (2) Other consumer ...6,653 Total consumer ...Commercial-domestic ...Commercial real estate ...Commercial...

  • Page 122
    ... 2004 (Restated) Interest Average Income/ Yield/ Balance Expense Rate Earning assets Time deposits placed and other short-term investments ...$ 13,696 $ 113 3.31% $ Federal funds sold and securities purchased under agreements to resell ...185,835 1,249 2.69 Trading account assets ...134,196 1,454...

  • Page 123
    ... reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. The Corporation's internal control over financial reporting includes those policies and procedures that...

  • Page 124
    ..., the accompanying Consolidated Balance Sheet and the related Consolidated Statement of Income, Consolidated Statement of Changes in Shareholders' Equity and Consolidated Statement of Cash Flows present fairly, in all material respects, the financial position of Bank of America Corporation and its...

  • Page 125
    ... Deposits ...Short-term borrowings ...Trading account liabilities ...Long-term debt ...Total interest expense ...Net interest income ...Noninterest income Service charges ...Investment and brokerage services ...Mortgage banking income ...Investment banking income ...Equity investment gains ...Card...

  • Page 126
    BANK OF AMERICA CORPORATION AND SUBSIDIARIES Consolidated Balance Sheet December 31 2004 2005 (Restated) (Dollars in millions) Assets Cash and cash equivalents ...Time deposits placed and other short-term investments ...Federal funds sold and securities purchased under agreements to resell (...

  • Page 127
    ...382 Net income ...Net unrealized losses on available-for-sale debt and marketable equity securities ...Net unrealized gains on foreign currency translation adjustments ...Net losses on derivatives ...Cash dividends paid: Common ...Preferred ...Common stock issued under employee plans and related tax...

  • Page 128
    ...Net (increase) decrease in other assets ...Net increase (decrease) in accrued expenses and other liabilities ...Other operating activities, net ...Net cash provided by (used in) operating activities ...Investing activities Net increase in time deposits placed and other short-term investments ...Net...

  • Page 129
    ...long standing policy to lay these internal swaps off to an external party within a three-day period. In almost all cases, cash was exchanged (either paid or received) with the external counterparty to compensate for market rate movements between the time that the internal swap and the matching trade...

  • Page 130
    ... market through the Consolidated Statement of Income with no related offset for hedge accounting. Increase (Decrease) in Net Income (1) Year Ended December 31 2004 2003 (Dollars in millions) As Previously Reported net income ...Internal fair value hedges ...Internal cash flow hedges ...Other, net...

  • Page 131
    ... to Consolidated Financial Statements-(Continued) Bank of America Corporation and Subsidiaries Consolidated Balance Sheet December 31, 2004 (Dollars in millions) Loans and leases, net of allowance for loan and lease losses ...Total assets ...Accrued expenses and other liabilities ...Long-term debt...

  • Page 132
    ...a material impact on the Corporation's results of operations or financial condition. On July 14, 2005, the FASB issued an exposure draft, FASB Staff Position (FSP) No. FAS 13-a, "Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged...

  • Page 133
    ... Ended December 31 2004 2003 2005 (Restated) (Restated) (Dollars in millions, except per share data) Net income (as reported) ...Stock-based employee compensation expense recognized during the year, net of related tax effects ...Stock-based employee compensation expense determined under fair value...

  • Page 134
    ... credit risk rating and the type of counterparty. Generally, the Corporation accepts collateral in the form of cash, U.S. Treasury securities and other marketable securities. Based on provisions contained in legal netting agreements, the Corporation has netted cash collateral against the applicable...

  • Page 135
    BANK OF AMERICA CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements-(Continued) and offset cash collateral held with the same counterparty on a net basis. For exchange-traded contracts, fair value is based on quoted market prices. For non-exchange traded contracts, fair value is ...

  • Page 136
    ... on Sales of Debt Securities, are determined using the specific identification method. Marketable equity securities are classified based on management's intention on the date of purchase and recorded on the Consolidated Balance Sheet as of the trade date. Marketable equity securities that are bought...

  • Page 137
    ... OF AMERICA CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements-(Continued) carried at estimated fair value based on market prices and recorded as Other Assets. Nonpublic and other equity investments for which representative market quotes are not readily available are initially...

  • Page 138
    ...-secured and is in the process of collection. Loans Held-for-Sale Loans held-for-sale include residential mortgage, loan syndications, and to a lesser degree, commercial real estate, consumer finance and other loans, and are carried at the lower of aggregate cost or market value. Loans held-for-sale...

  • Page 139
    ... or other types of loans which are generally funded through termamortizing debt structures. Other special purpose entities finance their activities by issuing short-term commercial paper. Both types of vehicles are designed to be paid off from the underlying cash flows of the assets held in the...

  • Page 140
    ... SUBSIDIARIES Notes to Consolidated Financial Statements-(Continued) Securitizations The Corporation securitizes, sells and services interests in residential mortgage loans, and from time to time, consumer finance, commercial and credit card loans. The accounting for these activities are governed by...

  • Page 141
    ... or is in a hyperinflationary economy, the functional currency used to measure the financial statements of a foreign entity is the U.S. dollar. In these instances, the resulting realized gains or losses are included in Net Income. Co-Branding Credit Card Arrangements The Corporation has co-brand...

  • Page 142
    ... value of net assets acquired ...Goodwill resulting from the FleetBoston Merger ... (1) The value of the shares of common stock exchanged with FleetBoston shareholders was based upon the average of the closing prices of the Corporation's common stock for the period commencing two trading days before...

  • Page 143
    ...the Corporation's business model. These costs were solely severance related. The Corporation does not expect to incur additional severance costs related to this initiative. (Dollars in millions) 2005 2004 Severance and employee-related charges: Merger-related ...Infrastructure initiative ...Systems...

  • Page 144
    ... income taxes ...Long-term debt ...Estimated fair value of net assets acquired ...Estimated goodwill resulting from the MBNA Merger(3) ... (1) The value of the shares of common stock exchanged with MBNA shareholders was based upon the average of the closing prices of the Corporation's common stock...

  • Page 145
    ... financial instrument), index, currency or commodity at a predetermined rate or price during a period or at a time in the future. Option agreements can be transacted on organized exchanges or directly between parties. The Corporation also provides credit derivatives to customers who wish to increase...

  • Page 146
    ...-traded instruments conform to standard terms and are subject to policies set by the exchange involved, including margin and security deposit requirements. Management believes the credit risk associated with these types of instruments is minimal. The average fair value of Derivative Assets for 2005...

  • Page 147
    ... to loss on these contracts will increase or decrease over their respective lives as currency exchange and interest rates fluctuate. Fair Value and Cash Flow Hedges The Corporation uses various types of interest rate and foreign currency exchange rate derivative contracts to protect against changes...

  • Page 148
    ... Unrealized Losses Fair Value (Dollars in millions) Available-for-sale securities 2005 U.S. Treasury securities and agency debentures ...Mortgage-backed securities ...Foreign securities ...Other taxable securities(1) ...Total taxable ...Tax-exempt securities ...Total available-for-sale securities...

  • Page 149
    BANK OF AMERICA CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements-(Continued) At December 31, 2005, accumulated net unrealized losses on AFS debt and marketable equity securities included in Accumulated OCI were $3.0 billion, net of the related income tax benefit of $1.8 ...

  • Page 150
    ...non-transferable until the third anniversary of the initial public offering. The Corporation also holds an option to increase its ownership interest in CCB to 19.9 percent over the next five years. At December 31, 2005, this $3.0 billion investment in CCB was included in Other Assets. Securities are...

  • Page 151
    BANK OF AMERICA CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements-(Continued) The Income Tax Expense attributable to realized net gains on debt securities sales was $400 million, $640 million and $329 million in 2005, 2004 and 2003, respectively. Note 7-Outstanding Loans and ...

  • Page 152
    ... other special purpose financing entities to access the commercial paper market and for other lending, leasing and real estate activities. Mortgage-related Securitizations The Corporation securitizes the majority of its residential mortgage loan originations in conjunction with or shortly after loan...

  • Page 153
    BANK OF AMERICA CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements-(Continued) The Corporation has retained MSRs from the sale or securitization of mortgage loans. Servicing fee and ancillary fee income on all mortgage loans serviced, including securitizations, was $789 million ...

  • Page 154
    .... The Corporation reviews its loans and leases portfolio on a managed basis. Managed loans and leases are defined as on-balance sheet Loans and Leases as well as loans in revolving securitizations, which include credit cards, home equity lines and commercial loans. New advances on accounts for which...

  • Page 155
    ... ...Commercial real estate ...Commercial lease financing ...Commercial-foreign ...Total commercial ...Total managed loans and leases ...Loans in revolving securitizations ...Total held loans and leases ... (Dollars in millions) Residential mortgage ...Credit card ...Home equity lines ...Direct...

  • Page 156
    ... and letters of credit, or derivatives to the VIE. The Corporation also provides asset management and related services to other special purpose vehicles that engage in lending, investing, or real estate activities. Total assets of these entities at December 31, 2005 and 2004 were approximately...

  • Page 157
    ...31, 2004. Bank of America, N.A. maintains a domestic program to offer up to a maximum of $60.0 billion, at any one time, of bank notes with fixed or floating rates and maturities of at least seven days from the date of issue. Short-term bank notes outstanding under this program totaled $22.5 billion...

  • Page 158
    ...month London InterBank Offered Rates (LIBOR). Bank of America Corporation and Bank of America, N.A. maintain various domestic and international debt programs to offer both senior and subordinated notes. The notes may be denominated in U.S. dollars or foreign currencies. At December 31, 2005 and 2004...

  • Page 159
    ... securities under its existing shelf registration statements. At December 31, 2005 and 2004, Bank of America, N.A. was authorized to issue approximately $9.5 billion and $27.2 billion of bank notes and Euro medium-term notes. The weighted average effective interest rates for total long-term debt...

  • Page 160
    BANK OF AMERICA CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements-(Continued) The following table is a summary of the outstanding Trust Securities and the Notes at December 31, 2005 as originated by Bank of America Corporation and the predecessor banks. (Dollars in millions) ...

  • Page 161
    ... Commercial letters of credit, issued primarily to facilitate customer trade finance activities, are usually collateralized by the underlying goods being shipped to the customer and are generally short-term. Credit card lines are unsecured commitments that are not legally binding. Management reviews...

  • Page 162
    ...of payments under these guarantees is remote. The Corporation also has written put options on highly rated fixed income securities. Its obligation under these agreements is to buy back the assets at predetermined contractual yields in the event of a severe market disruption in the short-term funding...

  • Page 163
    ... as remote. The Corporation has entered into additional guarantee agreements, including lease end obligation agreements, partial credit guarantees on certain leases, real estate joint venture guarantees, sold risk participation swaps and sold put options that require gross settlement. The maximum...

  • Page 164
    ...particular reporting period. Adelphia Communications Corporation (Adelphia) Bank of America, N.A. (BANA) and Banc of America Securities LLC (BAS) are defendants, among other defendants, in a putative class action and individual civil actions relating to Adelphia. The first of these actions was filed...

  • Page 165
    ...1998, a predecessor of BANA was named as a defendant in a class action filed in Superior Court of California, County of San Francisco, entitled Paul J. Miller v. Bank of America, N.A., challenging its practice of debiting accounts that received, by direct deposit, governmental benefits to repay fees...

  • Page 166
    ...Corporation or its subsidiaries facilitated improper trading in those funds, and a private attorney general action brought under California law. The lawsuits filed to date with respect to pre-merger FleetBoston subsidiaries include putative class actions purportedly brought on behalf of shareholders...

  • Page 167
    .... On July 13, 2005, the court granted in its entirety the motion to dismiss filed by the Corporation, BANA and Banc of America Securities Limited in the consolidated putative class actions. The court granted the plaintiffs a right to file a second amended complaint. After the filing of the second...

  • Page 168
    BANK OF AMERICA CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements-(Continued) several related entities in North Carolina state court for Mecklenburg County, entitled Parmalat Capital Finance Limited v. Bank of America Corp., et al. (the PCFL Action). PCFL is a Cayman Islands ...

  • Page 169
    BANK OF AMERICA CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements-(Continued) to have amounts representing their account balances under The Bank of America 401(k) Plan transferred to The Bank of America Pension Plan. The motion for class certification is pending. The IRS is ...

  • Page 170
    ... These repurchases were partially offset by the issuance of approximately 121 million shares of common stock under employee plans, which increased Shareholders' Equity by $3.9 billion, net of $127 million of deferred compensation related to restricted stock awards, and decreased diluted earnings per...

  • Page 171
    ... shares, from time to time, in the open market or in private transactions through the Corporation's approved repurchase programs. The Corporation expects to continue to repurchase a number of shares of common stock at least equal to any shares issued under the Corporation's employee stock plans...

  • Page 172
    ...Consolidated Financial Statements for a discussion on the calculation of earnings per common share. (Dollars in millions, except per share information; shares in thousands) 2005 2004 (Restated) 2003 (Restated) Earnings per common share Net income ...Preferred stock dividends ...Net income available...

  • Page 173
    ... 31, 2005 that management believes have changed the Corporation's, Bank of America, N.A.'s and Bank of America, N.A. (USA)'s capital classifications. The regulatory capital guidelines measure capital in relation to the credit and market risks of both on and off-balance sheet items using various risk...

  • Page 174
    ... of service. It is the policy of the Corporation to fund not less than the minimum funding amount required by ERISA. The Pension Plan has a balance guarantee feature, applied at the time a benefit payment is made from the plan, that protects participant balances transferred and certain compensation...

  • Page 175
    ... a benchmark rate. The tables within this Note include the information related to these plans beginning on April 1, 2004. Reflected in these results are key changes to the Postretirement Health and Life Plans and the Nonqualified Pension Plans. On December 8, 2003, the President signed the Medicare...

  • Page 176
    ... Pension Plans(1) 2005 2004 Postretirement Health and Life Plans(1) 2005 2004 (Dollars in millions) Change in fair value of plan assets (Primarily listed stocks, fixed income and real estate) Fair value, January 1 ...FleetBoston balance, April 1, 2004 ...Actual return on plan assets ...Company...

  • Page 177
    ... (8) 24 9 $ 97 $ 27 62 - 3 14 - $ 106 $ 25 45 - 3 11 - $ 84 Weighted average assumptions used to determine net cost for years ended December 31 Discount rate(1) ...Expected return on plan assets ...Rate of compensation increase ... 5.75% 8.50 4.00 6.25% 8.50 4.00 6.75% 8.50 4.00 5.75% n/a 4.00...

  • Page 178
    ... blocks used to arrive at the long-term return assumption would include an implied return from equity securities of 8.75 percent, debt securities of 5.75 percent, and real estate of 8.75 percent for all pension plans and postretirement health and life plans. The Qualified Pension Plans' asset...

  • Page 179
    ... Notes to Consolidated Financial Statements-(Continued) The Postretirement Health and Life Plans' asset allocation at December 31, 2005 and 2004 and target allocation for 2006 by asset category are as follows: Asset Category Equity securities ...Debt securities ...Real estate ...Total ...2006 Target...

  • Page 180
    ...employees of predecessor companies assumed in mergers. The weighted average option price of the assumed options was $33.69 at December 31, 2005. The Corporation has certain stock-based compensation plans that were approved by its shareholders. These plans are the Key Employee Stock Plan and the Key...

  • Page 181
    .... At December 31, 2005, approximately 20 million options were outstanding under this plan. The options expire on January 31, 2007. No further awards may be granted. Take Ownership! The Bank of America Global Associate Stock Option Program (Take Ownership!) covered all employees below a specified...

  • Page 182
    ... OF AMERICA CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements-(Continued) The following table summarizes information about stock options outstanding at December 31, 2005: Outstanding Options Options Exercisable Number Weighted Weighted Number Weighted Outstanding at Average...

  • Page 183
    ... for credit losses ...Available-for-sale securities ...Accrued expenses ...Employee compensation and retirement benefits ...Foreign tax credit carryforward ...Loan fees and expenses ...Other ...Gross deferred tax assets ...Valuation allowance(1) ...Total deferred tax assets, net of valuation...

  • Page 184
    ... market have been valued using quoted market prices. The fair values of trading account instruments and securities are reported in Notes 4 and 6 of the Consolidated Financial Statements. Derivative Financial Instruments All derivatives are recognized on the balance sheet at fair value, net of cash...

  • Page 185
    ... of derivatives used as economic hedges of interest rate and foreign exchange rate fluctuations that do not qualify for SFAS 133 hedge accounting treatment, gains or losses on sales of whole mortgage loans, and Gains on Sales of Debt Securities. Total Revenue includes Net Interest Income on a fully...

  • Page 186
    ... Total Corporation 2004 2003 2005 (Restated) (Restated) Global Consumer and Small Business Banking(1) 2005 2004 2003 (Dollars in millions) Net interest income (FTE basis) ...Noninterest income ...Total revenue (FTE basis) ...Provision for credit losses ...Gains (losses) on sales of debt securities...

  • Page 187
    ...OF AMERICA CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements-(Continued) The following tables present reconciliations of the four business segments' Total Revenue on a FTE basis and Net Income to the Consolidated Statement of Income, and Total Assets to the Consolidated Balance...

  • Page 188
    BANK OF AMERICA CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements-(Continued) Note 21-Parent Company Information The following tables present the Parent Company Only financial information: Condensed Statement of Income Year Ended December 31 (Dollars in millions) 2005 2004 (...

  • Page 189
    ...operating activities ... Investing activities Net (purchases) sales of securities ...Net payments from (to) subsidiaries ...Other investing activities, net ...Net cash provided by (used in) investing activities ... Financing activities Net increase (decrease) in commercial paper and other short-term...

  • Page 190
    ... Total Revenue, Income (Loss) Before Income Taxes and Net Income (Loss) 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...

  • Page 191
    ... Deposits ...Short-term borrowings ...Trading account liabilities ...Long-term debt ...Total interest expense ...Net interest income ...Noninterest income Service charges ...Investment and brokerage services ...Mortgage banking income ...Investment banking income ...Equity investment gains ...Card...

  • Page 192
    ... Deposits ...Short-term borrowings ...Trading account liabilities ...Long-term debt ...Total interest expense ...Net interest income ...Noninterest income Service charges ...Investment and brokerage services ...Mortgage banking income ...Investment banking income ...Equity investment gains ...Card...

  • Page 193
    ... Notes to Consolidated Financial Statements-(Continued) Consolidated Balance Sheet 2005 Quarters Fourth Third Second First As As As As Previously Previously Previously Previously (1) Reported Restated Reported Restated Reported Restated Reported Restated (Dollars in millions) Assets Cash and cash...

  • Page 194
    ......330 330 420 420 478 Total securities ...Loans and leases ...Allowance for loan and lease losses ...Loans and leases, net of allowance ...Premises and equipment, net ...Mortgage servicing rights ...Goodwill ...Core deposit intangibles and other intangibles ...Other assets ...195,073 521,837 (8,626...

  • Page 195
    ... available-for-sale debt and marketable equity securities ...Net unrealized gains (losses) on foreign currency translation adjustments ...Net gains (losses) on derivatives ...Cash dividends paid: Common ...Preferred ...Common stock issued under employee plans and related tax benefits ...Common stock...

  • Page 196
    ... available-for-sale debt and marketable equity securities ...Net unrealized gains (losses) on foreign currency translation adjustments ...Net gains (losses) on derivatives ...Cash dividends paid: Common ...Preferred ...Common stock issued under employee plans and related tax benefits ...Common stock...

  • Page 197
    ...available-for-sale debt and marketable equity securities ...Net unrealized gains (losses) on foreign currency translation adjustments ...Net gains (losses) on derivatives ...Cash dividends paid: Common ...Preferred ...Common stock issued under employee plans and related tax benefits ...Stocks issued...

  • Page 198
    ...available-for-sale debt and marketable equity securities ...Net unrealized gains (losses) on foreign currency translation adjustments ...Net gains (losses) on derivatives ...Cash dividends paid: Common ...Preferred ...Common stock issued under employee plans and related tax benefits ...Stocks issued...

  • Page 199
    BANK OF AMERICA CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements-(Continued) Consolidated Statement of Cash Flows Three Months Ended March 31 2005 2004 As Previously As Previously Reported Restated Reported Restated (Dollars in millions) Operating activities Net income ......

  • Page 200
    ...Net increase in trading and derivative instruments ...Net increase in other assets ...Net decrease in accrued expenses and other liabilities ...Other operating activities, net ...Net cash used in operating activities ...Investing activities Net decrease in time deposits placed and other short-term...

  • Page 201
    ...Net increase in trading and derivative instruments ...Net increase in other assets ...Net decrease in accrued expenses and other liabilities ...Other operating activities, net ...Net cash used in operating activities ...Investing activities Net decrease in time deposits placed and other short-term...

  • Page 202
    ... reported to the Audit Committee. As a result of that review and testing, management identified additional deficiencies in the Corporation's processes and procedures related to the accounting treatment of derivative transactions used as hedges against changes in interest rates and foreign currency...

  • Page 203
    ...the New York Stock Exchange (the "NYSE") its most recent annual certification by its Chief Executive Officer confirming that the Corporation has complied with the NYSE corporate governance standards, as required by Section 303A.12(a) of the NYSE-Listed Company Manual. Item 11. EXECUTIVE COMPENSATION...

  • Page 204
    ...filed as part of this report: Financial Statements: Report of Independent Registered Public Accounting Firm Consolidated Statement of Income for the years ended December 31, 2005, 2004 and 2003 Consolidated Balance Sheet at December 31, 2005 and 2004 Consolidated Statement of Changes in Shareholders...

  • Page 205
    ...undersigned, thereunto duly authorized. BANK OF AMERICA CORPORATION Date: March 16, 2006 By: */s/ KENNETH D. LEWIS Kenneth D. Lewis Chairman, Chief Executive Officer and President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following...

  • Page 206
    ... 16, 2006 */s/ MEREDITH R. SPANGLER Meredith R. Spangler Director March 16, 2006 */s/ JACKIE M. WARD Jackie M. Ward Director March 16, 2006 *By: /s/ WILLIAM J. MOSTYN III William J. Mostyn III Attorney-in-Fact 170

  • Page 207
    ...Report on Form 8-K filed March 30, 2004. Amendment to the Deposit Agreement relating to registrant's Series VII Fixed/Adjustable Rate Cumulative Preferred Stock of Fleet Financial Group, Inc. and dated as of February 21, 1996, effective as of April 1, 2004, by and between Bank of America Corporation...

  • Page 208
    ... Current Report on Form 8-K filed November 18, 1998. Amended and Restated Program Agreement dated as of August 4, 2005 among registrant, Banc of America Securities Limited and others. Amended and Restated Issuing Paying Agency Agreement dated as of January 15, 2004 between Bank of America, N.A., as...

  • Page 209
    ... to BankBoston Corporation) and The Bank of New York, as Trustee, pursuant to which registrant issued its Floating Rate Junior Subordinated Deferrable Interest Debentures due 2027, incorporated by reference to Exhibit 4.1 to BankBoston Corporation's Registration Statement on Form S-3 (File No. 333...

  • Page 210
    ... Annual Report on Form 10-K (the "2001 10K"); and Amendment thereto dated December 10, 2002, incorporated by reference to Exhibit 10(b) of registrant's 2002 Annual Report on Form 10-K (the "2002 10-K"). NationsBank Corporation and Designated Subsidiaries Deferred Compensation Plan for Key Employees...

  • Page 211
    ...Global Associate Stock Option Program, effective October 1, 1998, incorporated by reference to Exhibit 10(t) of the 2002 10-K. Amendment to various plans in connection with FleetBoston Financial Corporation merger, incorporated by reference to Exhibit 10(v) of registrant's 2003 Annual Report on Form...

  • Page 212
    ... Statement on Form S-4 (File No. 333-110924). Retirement Agreement dated January 26, 2005 between Bank of America Corporation and Charles K. Gifford, incorporated by reference to Exhibit 10.1 to the registrant's Form 8-K filed on January 26, 2005. Amendment to various FleetBoston stock option...

  • Page 213
    ... U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * Denotes executive compensation plan or arrangement. E-7