Bank of America 2007 Annual Report Download - page 59

December 31 Average Balance
(Dollars in millions) 2007 2006 2007 2006
Total loans and leases $ 84,600 $ 65,535 $ 73,469 $ 60,910
Total earning assets
(1)
145,979 117,342 126,244 105,028
Total assets
(1)
157,157 125,287 135,319 112,557
Total deposits 144,865 113,568 124,867 102,389
(1) Total earning assets and total assets include asset allocations to match liabilities (i.e., deposits).
GWIM provides a wide offering of customized banking, investment
and brokerage services tailored to meet the changing wealth management
goals of our individual and institutional customer base. Our clients have
access to a range of services offered through three primary businesses:
U.S. Trust, Bank of America Private Wealth Management (U.S. Trust);
Columbia Management (Columbia); and Premier Banking and Investments
(PB&I). In addition, ALM/Other primarily includes the results of ALM activ-
ities.
In December of 2007, we completed the sale of Marsico and realized
a pre-tax gain on this transaction of approximately $1.5 billion recognized
in All Other. The business results prior to the closing of the Marsico sale
are reflected within the Columbia business.
Net income decreased $128 million, or six percent, to $2.1 billion in
2007, due mainly to losses associated with the support provided to cer-
tain cash funds managed within Columbia and an increase in noninterest
expense.
Net interest income increased $186 million, or five percent, to $3.9
billion driven by the impact of the U.S. Trust Corporation acquisition and
organic growth in average deposit and loan balances. The growth in balan-
ces was partially offset by spread compression and a shift in the deposit
product mix. GWIM deposit growth benefited from the migration of
customer relationships and related balances from GCSBB, organic growth
and the U.S. Trust Corporation acquisition. A more detailed discussion
regarding migrated customer relationships and related balances is pro-
vided in the PB&I discussion.
Noninterest income increased $380 million, or 10 percent, to $4.1
billion driven by an increase in investment and brokerage services of $827
million, or 24 percent. This increase was due to higher AUM primarily
attributable to the impact of the U.S. Trust Corporation acquisition, net
client inflows and favorable market conditions combined with an increase
in brokerage activity. Partially offsetting this increase was a decrease in all
other income due to losses associated with the support provided to cer-
tain cash funds managed within Columbia.
Noninterest expense increased $768 million, or 20 percent, to $4.6
billion driven by the addition of U.S. Trust Corporation, higher revenue-
related expenses and increased marketing costs.
Client Assets
The following table presents client assets which consist of AUM, client
brokerage assets and assets in custody.
Client Assets
December 31
(Dollars in millions) 2007 2006
Assets under management $643,531 $542,977
Client brokerage assets
(1)
222,661 203,799
Assets in custody
167,575 107,902
Less: Client brokerage assets and assets in
custody included in assets under management
(87,071) (67,509)
Total net client assets $946,696 $787,169
(1) Client brokerage assets include non-discretionary brokerage and fee-based assets.
AUM increased $100.6 billion, or 19 percent, to $643.5 billion as of
December 31, 2007 compared to 2006, driven by the U.S. Trust Corpo-
ration acquisition, which contributed $115.6 billion, as well as net inflows
and market appreciation partially offset by the sale of Marsico, which
resulted in a decrease of $60.9 billion. As of December 31, 2007, client
brokerage assets increased by $18.9 billion, or nine percent, to $222.7
billion compared to the same period in 2006, driven by increased broker-
age activity. Assets in custody increased $59.7 billion, or 55 percent, to
$167.6 billion compared to the same period in 2006, driven mainly by
U.S. Trust Corporation which contributed $45.0 billion.
U.S. Trust, Bank of America Private Wealth
Management
In July 2007, we completed the acquisition of U.S. Trust Corporation for
$3.3 billion in cash combining it with The Private Bank and its ultra-wealthy
extension, Family Wealth Advisors, to form U.S. Trust. The results of the
combined business were reported for periods beginning on July 1, 2007.
Prior to July 1, 2007, the results solely reflect that of the former Private
Bank.U.S. Trust provides comprehensive wealth management solutions to
wealthy and ultra-wealthy clients with investable assets of more than $3
million. In addition, U.S. Trust provides resources and customized sol-
utions to meet clients’ wealth structuring, investment management, trust
and banking services as well as specialty asset management services (oil
and gas, real estate, farm and ranch, timberland, private businesses and
tax advisory). Clients also benefit from access to resources available
through the Corporation including capital markets products, large and
complex financing solutions, and its extensive banking platform.
Net income increased $17 million, or four percent, compared to
2006, to $467 million due to higher total revenue partially offset by
increases in noninterest expense and provision for credit losses. Net
interest income increased $134 million due to the acquisition of U.S.
Trust Corporation and organic growth in average loans and leases and
average deposits. This increase was partially offset by spread com-
pression and the shift in deposit product mix. Growth in noninterest
income was driven by a $312 million increase in investment and broker-
age services related to acquisitions and organic growth. Noninterest
expense increased $359 million to $1.6 billion driven by acquisitions and
higher personnel-related expenses.
Columbia Management
Columbia is an asset management business serving the needs of both
institutional clients and individual customers. Columbia provides asset
management products and services, including mutual funds and separate
accounts. Columbia mutual fund offerings provide a broad array of invest-
ment strategies and products including equity, fixed income (taxable and
nontaxable) and money market (taxable and nontaxable) funds. Columbia
distributes its products and services directly to institutional clients, and
distributes to individuals through U.S. Trust, PB&I and nonproprietary
channels including other brokerage firms.
Bank of America 2007 57