Bank of America 2005 Annual Report Download - page 185

BANK OF AMERICA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Deposits
The fair value for deposits with stated maturities was calculated by discounting contractual cash flows using current
market rates for instruments with similar maturities. The carrying value of foreign time deposits approximates fair
value. For deposits with no stated maturities, the carrying amount was considered to approximate fair value and does
not take into account the significant value of the cost advantage and stability of the Corporation’s long-term
relationships with depositors.
The book and fair values of certain financial instruments at December 31, 2005 and 2004 were as follows:
December 31
2005 2004
(Restated)
(Dollars in millions) Book Value Fair Value Book Value Fair Value
Financial assets
Loans ................................................................. $545,238 $542,626 $492,033 $497,614
Financial liabilities
Deposits .............................................................. 634,670 633,928 618,570 618,409
Long-term debt ........................................................ 100,848 101,446 97,116 101,477
Note 20—Business Segment Information
The Corporation reports the results of its operations through four business segments: Global Consumer and Small
Business Banking, Global Business and Financial Services, Global Capital Markets and Investment Banking, and Global
Wealth and Investment Management. Certain operating segments have been aggregated into a single business segment.
The Corporation may periodically reclassify business segment results based on modifications to its management
reporting methodologies and changes in organizational alignment.
Global Consumer and Small Business Banking provides a diversified range of products and services to individuals
and small businesses through multiple delivery channels. Global Business and Financial Services serves domestic and
international business clients providing financial services, specialized industry expertise and local delivery through a
global team of client managers and a variety of businesses. During the third quarter of 2005, our operations in Mexico
were realigned and are now included in the results of Global Business and Financial Services, rather than Global
Capital Markets and Investment Banking.Global Capital Markets and Investment Banking provides capital-raising
solutions, advisory services, derivatives capabilities, equity and debt sales and trading for the Corporation’s clients as
well as traditional bank deposit and loan products, treasury management and payment services to large corporations
and institutional clients. Also during the third quarter of 2005, the Corporation announced the future combination of
Global Business and Financial Services and Global Capital Markets and Investment Banking that was effective on
January 1, 2006. This new segment is called Global Corporate and Investment Banking.Global Wealth and Investment
Management offers investment services, estate management, financial planning services, fiduciary management, credit
and banking expertise, and diversified asset management products to institutional clients as well as affluent and
high-net-worth individuals.
All Other consists primarily of Equity Investments, the residual impact of the allowance for credit losses process,
Merger and Restructuring Charges, intersegment eliminations, and the results of certain consumer finance and
commercial lending businesses that are being liquidated. All Other also includes certain amounts associated with the
ALM process, including the 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 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 taxable-equivalent (FTE) basis and Noninterest Income. The
adjustment of Net Interest Income to a FTE basis results in a corresponding increase in Income Tax Expense. The Net
Interest Income of the business segments includes the results of a funds transfer pricing process that matches assets and
liabilities with similar interest rate sensitivity and maturity characteristics. Net Interest Income of the business
segments also includes an allocation of Net Interest Income generated by the Corporation’s ALM process.
Certain expenses not directly attributable to a specific business segment are allocated to the segments based on
pre-determined means. The most significant of these expenses include data processing costs, item processing costs and
certain centralized or shared functions. Data processing costs are allocated to the segments based on equipment usage.
Item processing costs are allocated to the segments based on the volume of items processed for each segment. The cost of
certain centralized or shared functions are allocated based on methodologies which reflect utilization.
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