Bank of America 2007 Annual Report Download - page 41

Balance Sheet Analysis
Table 4 Selected Balance Sheet Data
December 31 Average Balance
(Dollars in millions) 2007 2006 2007 2006
Assets
Federal funds sold and securities purchased under agreements to resell $ 129,552 $ 135,478 $ 155,828 $ 175,334
Trading account assets 162,064 153,052 187,287 145,321
Debt securities 214,056 192,846 186,466 225,219
Loans and leases, net of allowance for loan and lease losses 864,756 697,474 766,329 643,259
All other assets 345,318 280,887 306,163 277,548
Total assets $1,715,746 $1,459,737 $1,602,073 $1,466,681
Liabilities
Deposits $ 805,177 $ 693,497 $ 717,182 $ 672,995
Federal funds purchased and securities sold under agreements to repurchase 221,435 217,527 253,481 286,903
Trading account liabilities 77,342 67,670 82,721 64,689
Commercial paper and other short-term borrowings 191,089 141,300 171,333 124,229
Long-term debt 197,508 146,000 169,855 130,124
All other liabilities 76,392 58,471 70,839 57,278
Total liabilities 1,568,943 1,324,465 1,465,411 1,336,218
Shareholders’ equity 146,803 135,272 136,662 130,463
Total liabilities and shareholders’ equity $1,715,746 $1,459,737 $1,602,073 $1,466,681
At December 31, 2007, total assets were $1.7 trillion, an increase
of $256.0 billion, or 18 percent, from December 31, 2006. Growth in
period end total assets was due to an increase in loans and leases, AFS
debt securities and all other assets. The increase in loans and leases was
attributable to organic growth and the LaSalle merger. The increases in
AFS debt securities and all other assets were driven by the LaSalle merg-
er. The fair value of the assets acquired in the LaSalle merger was approx-
imately $120 billion. All other assets also increased due to higher loans
held-for-sale and the fair market value adjustment associated with our
investment in China Construction Bank (CCB).
Average total assets in 2007 increased $135.4 billion, or nine per-
cent, from 2006 primarily due to the increase in average loans and leases
driven by the same factors as described above. Average trading account
assets also increased during 2007 reflective of growth in the underlying
business in the first half of 2007. These increases were partially offset by
a decrease in AFS debt securities. The acquisition of LaSalle occurred in
the fourth quarter of 2007 minimizing its impact on the average balance
sheet.
At December 31, 2007, total liabilities were $1.6 trillion, an increase
of $244.5 billion, or 18 percent, from December 31, 2006. Average total
liabilities in 2007 increased $129.2 billion, or 10 percent, from 2006. The
increase in period end and average total liabilities was attributable to
increases in deposits and long-term debt, which were utilized to support
the growth in overall assets. In addition, the increase in period end and
average total liabilities was due to the funding of, and the assumption of
liabilities associated with, the LaSalle merger. The fair value of the
liabilities assumed in the LaSalle merger was approximately $100 billion.
Trading Account Assets
Trading account assets consist primarily of fixed income securities
(including government and corporate debt), equity and convertible instru-
ments. The average balance increased $42.0 billion to $187.3 billion in
2007, due to growth in client-driven market-making activities in interest
rate, credit and equity products but was negatively impacted by the market
disruptions in the second half of 2007. For additional information, see
Market Risk Management beginning on page 86.
Debt Securities
AFS debt securities include fixed income securities such as mortgage-
backed securities, foreign debt, ABS, municipal debt, U.S. Government
agencies and corporate debt. We use the AFS portfolio primarily to man-
age interest rate risk and liquidity risk and to take advantage of market
conditions that create more economically attractive returns on these
investments. The average balance in the debt securities portfolio
decreased $38.8 billion from 2006 due to the third quarter 2006 sale of
$43.7 billion of mortgage-backed securities as well as maturities and
paydowns. The period end balances were also impacted by the addition of
LaSalle. For additional information on our AFS debt securities portfolio,
see Market Risk Management – Securities on page 91 and Note 5 – Secu-
rities to the Consolidated Financial Statements.
Loans and Leases, Net of Allowance for Loan
and Lease Losses
Average loans and leases, net of allowance for loan and lease losses, was
$766.3 billion in 2007, an increase of 19 percent from 2006. The aver-
age consumer loan and lease portfolio increased $88.3 billion primarily
due to higher retained mortgage production. The average commercial loan
and lease portfolio increased $35.4 billion primarily due to organic growth.
The average commercial and, to a lesser extent, consumer loans and
leases increased due to the addition of loans acquired as a result of the
LaSalle merger. For a more detailed discussion of the loan portfolio and
the allowance for credit losses, see Credit Risk Management beginning on
page 69, Note 6 – Outstanding Loans and Leases and Note 7 – Allowance
for Credit Losses to the Consolidated Financial Statements.
All Other Assets
Period end all other assets increased $64.4 billion at December 31,
2007, an increase of 23 percent from December 31, 2006, driven primar-
ily by an increase of $15.9 billion in loans held-for-sale and a pre-tax
$13.4 billion fair value adjustment associated with our CCB investment.
Additionally, the increase in all other assets was impacted by the LaSalle
merger.
Bank of America 2007 39