Bank of America 2007 Annual Report Download - page 146

In addition to the outstanding Trust Securities and Notes included in
the preceding table, non-consolidated wholly-owned subsidiary funding
vehicles of BAC North America Holding Company (BACNAH, formerly ABN
AMRO North America Holding Company) and its direct subsidiary, LaSalle
Bank Corporation (LBC) issued preferred securities (Funding Securities).
These subsidiary funding vehicles have invested the proceeds of their
Funding Securities in separate series of preferred securities of BACNAH or
LBC (BACNAH Preferred Securities). The BACNAH Preferred Securities (and
the corresponding Funding Securities) are non-cumulative and permit
nonpayment of dividends within certain limitations. The issuance dates for
the BACNAH Preferred Securities (and the related Funding Securities)
range from 2000 to 2002. These Funding Securities are subject to man-
datory redemption upon repayment by the Corporation of the correspond-
ing series of BACNAH Preferred Securities at a redemption price equal to
their liquidation amount plus accrued and unpaid distributions for up to
one quarter.
For additional information on Trust Securities for regulatory capital
purposes, see Note 15 – Regulatory Requirements and Restrictions to the
Consolidated Financial Statements.
Note 13 – Commitments and Contingencies
In the normal course of business, the Corporation enters into a number of
off-balance sheet commitments. These commitments expose the Corpo-
ration to varying degrees of credit and market risk and are subject to the
same credit and market risk limitation reviews as those instruments
recorded on the Corporation’s Consolidated Balance Sheet.
Credit Extension Commitments
The Corporation enters into commitments to extend credit such as loan
commitments, SBLCs and commercial letters of credit to meet the financ-
ing needs of its customers. The unfunded legally binding lending commit-
ments shown in the following table are net of amounts distributed (e.g.,
syndicated) to other financial institutions of $39.2 billion and $30.5 billion
at December 31, 2007 and 2006. At December 31, 2007, the carrying
amount of these commitments, excluding fair value adjustments as dis-
cussed below, was $550 million, including deferred revenue of $32 million
and a reserve for unfunded legally binding lending commitments of $518
million. At December 31, 2006, the carrying amount of these commit-
ments was $444 million, including deferred revenue of $47 million and a
reserve for unfunded legally binding lending commitments of $397 million.
The carrying amount of these commitments is recorded in accrued
expenses and other liabilities.
The table below also includes the notional value of commitments of
$20.9 billion which was measured at fair value in accordance with SFAS
159 at December 31, 2007. However, the table below excludes the fair
value adjustment of $660 million on these commitments that was
recorded in accrued expenses and other liabilities. See Note 19 – Fair
Value Disclosures to the Consolidated Financial Statements for additional
information on the adoption of SFAS 159.
Legally binding commitments to extend credit generally have speci-
fied rates and maturities. Certain of these commitments have adverse
change clauses that help to protect the Corporation against deterioration
in the borrowers’ ability to pay.
(Dollars in millions)
Expires in 1
year or less
Expires after 1
year through
3 years
Expires after 3
years through
5 years
Expires after
5 years Total
Credit extension commitments, December 31, 2007
Loan commitments $ 178,931 $ 92,153 $106,904 $ 27,902 $ 405,890
Home equity lines of credit 8,482 1,828 2,758 107,055 120,123
Standby letters of credit and financial guarantees 31,629 14,493 7,943 8,731 62,796
Commercial letters of credit 3,753 50 33 717 4,553
Legally binding commitments
(1)
222,795 108,524 117,638 144,405 593,362
Credit card lines 876,393 17,864 – – 894,257
Total credit extension commitments $1,099,188 $126,388 $117,638 $144,405 $1,487,619
Credit extension commitments, December 31, 2006
Loan commitments $ 151,604 $ 60,637 $ 90,988 $ 32,133 $ 335,362
Home equity lines of credit 1,738 1,801 2,742 91,919 98,200
Standby letters of credit and financial guarantees 29,213 10,712 6,744 6,337 53,006
Commercial letters of credit 3,880 180 27 395 4,482
Legally binding commitments
(1)
186,435 73,330 100,501 130,784 491,050
Credit card lines 840,215 13,377 – – 853,592
Total credit extension commitments $1,026,650 $ 86,707 $100,501 $130,784 $1,344,642
(1) Includes commitments to VIEs disclosed in Note 9 – Variable Interest Entities to the Consolidated Financial Statements, including $47.3 billion and $29.8 billion to corporation-sponsored multi-seller conduits and $2.3 billion
and $5.5 billion to CDOs at December 31, 2007 and 2006. Also includes commitments to SPEs that are not disclosed in Note 9 – Variable Interest Entities to the Consolidated Financial Statements because the Corporation
does not hold a significant variable interest or because they are QSPEs, including $6.1 billion and $2.3 billion to municipal bond trusts and $1.7 billion and $4.6 billion to customer-sponsored conduits at December 31, 2007
and 2006.
144 Bank of America 2007