Bank of America 2007 Annual Report Download - page 42

Deposits
Average deposits increased $44.2 billion to $717.2 billion in 2007 com-
pared to 2006 due to a $31.3 billion increase in average domestic
interest-bearing deposits and a $16.6 billion increase in average foreign
interest-bearing deposits. We categorize our deposits as core or market-
based deposits. Core deposits are generally customer-based and repre-
sent a stable, low-cost funding source that usually reacts more slowly to
interest rate changes than market-based deposits. Core deposits include
savings, NOW and money market accounts, consumer CDs and IRAs, and
noninterest-bearing deposits. Core deposits exclude negotiable CDs, pub-
lic funds, other domestic time deposits and foreign interest-bearing depos-
its. Average core deposits increased $19.3 billion to $593.9 billion in
2007, a three percent increase from the prior year. The increase was
attributable to growth in our average consumer CDs and IRAs due to a
shift from noninterest-bearing and lower yielding deposits to our higher
yielding CDs. Average market-based deposit funding increased $24.9 bil-
lion to $123.3 billion in 2007 compared to 2006 due to increases of
$16.6 billion in foreign interest-bearing deposits and $8.4 billion in nego-
tiable CDs, public funds and other time deposits related to funding of
growth in core and market-based assets. The increase in deposits was
also impacted by the assumption of deposits, primarily money market,
consumer CDs, and other domestic time deposits associated with the
LaSalle merger.
Trading Account Liabilities
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 $18.0 billion to
$82.7 billion in 2007, which was due to growth in client-driven market-
making activities in equity products, partially offset by a reduction in usage
targets for a variety of client activities.
Commercial Paper and Other Short-term Borrowings
Commercial paper and other short-term borrowings provide a funding
source to supplement deposits in our ALM strategy. The average balance
increased $47.1 billion to $171.3 billion in 2007, mainly due to increased
commercial paper and Federal Home Loan Bank advances to fund core
asset growth, primarily in the ALM portfolio and the funding of the LaSalle
acquisition.
Long-term Debt
Average long-term debt increased $39.7 billion to $169.9 billion. The
increase resulted from the funding of core asset growth, and the funding
of, and assumption of liabilities associated with, the LaSalle merger. For
additional information, see Note 12 – Short-term Borrowings and Long-
term Debt to the Consolidated Financial Statements.
Shareholders’ Equity
Period end and average shareholders’ equity increased $11.5 billion and
$6.2 billion due to net income, increased net gains in accumulated OCI,
including an $8.4 billion, net-of-tax, fair value adjustment relating to our
investment in CCB, common stock issued in connection with employee
benefit plans, and preferred stock issued. These increases were partially
offset by dividend payments, share repurchases and the adoption of cer-
tain new accounting standards.
40 Bank of America 2007