Bank of America 2008 Annual Report Download - page 140

Note 6 – Outstanding Loans and Leases
Outstanding loans and leases at December 31, 2008 and 2007 were:
December 31
(Dollars in millions) 2008 2007
Consumer
Residential mortgage $247,999 $274,949
Home equity 152,547 114,820
Discontinued real estate
(1)
19,981 n/a
Credit card – domestic 64,128 65,774
Credit card – foreign 17,146 14,950
Direct/Indirect consumer
(2)
83,436 76,538
Other consumer
(3)
3,442 4,170
Total consumer 588,679 551,201
Commercial
Commercial – domestic
(4)
219,233 208,297
Commercial real estate
(5)
64,701 61,298
Commercial lease financing 22,400 22,582
Commercial – foreign 31,020 28,376
Total commercial loans 337,354 320,553
Commercial loans measured at fair value
(6)
5,413 4,590
Total commercial 342,767 325,143
Total loans and leases $931,446 $876,344
(1) Includes $18.2 billion of pay option loans and $1.8 billion of subprime loans obtained as part of the acquisition of Countrywide. The Corporation no longer originates these products.
(2) Includes foreign consumer loans of $1.8 billion and $3.4 billion at December 31, 2008 and 2007.
(3) Includes consumer finance loans of $2.6 billion and $3.0 billion, and other foreign consumer loans of $618 million and $829 million at December 31, 2008 and 2007.
(4) Includes small business commercial – domestic loans, primarily card-related, of $19.1 billion and $19.3 billion at December 31, 2008 and 2007.
(5) Includes domestic commercial real estate loans of $63.7 billion and $60.2 billion, and foreign commercial real estate loans of $979 million and $1.1 billion at December 31, 2008 and 2007.
(6) Certain commercial loans are measured at fair value in accordance with SFAS 159 and include commercial – domestic loans of $3.5 billion and $3.5 billion, commercial – foreign loans of $1.7 billion and $790 million,
and commercial real estate loans of $203 million and $304 million at December 31, 2008 and 2007. See Note 19 – Fair Value Disclosures to the Consolidated Financial Statements for additional discussion of fair
value for certain financial instruments.
n/a = not applicable
The Corporation mitigates a portion of its credit risk in the residential
mortgage portfolio through synthetic securitizations which are cash collat-
eralized and provide mezzanine risk protection which will reimburse the
Corporation in the event that losses exceed 10 bps of the original pool
balance. As of December 31, 2008 and 2007, $109.3 billion and
$140.5 billion of mortgage loans were protected by these agreements. As
of December 31, 2008, $146 million of credit and other related costs
recognized in 2008 are reimbursable by these structures. In addition, the
Corporation has entered into credit protection agreements with
government-sponsored enterprises on $9.6 billion and $32.9 billion as of
December 31, 2008 and 2007, providing full protection on conforming
residential mortgage loans that become severely delinquent. These struc-
tures provided risk mitigation for approximately 48 percent and 63 per-
cent of the residential mortgage portfolio at December 31, 2008 and
2007.
Nonperforming Loans and Leases
The following table presents the recorded loan amounts for commercial
loans, without consideration for the specific component of the allowance
for loan and lease losses, which were considered individually impaired in
accordance with SFAS 114 at December 31, 2008 and 2007. SFAS 114
defines impairment to include performing loans which had previously
been accounted for as a troubled debt restructuring and excludes all
commercial leases.
Impaired Loans
December 31
(Dollars in millions) 2008 2007
Commercial
Commercial – domestic
(1)
$2,257 $1,018
Commercial real estate 3,906 1,099
Commercial – foreign 290 19
Total impaired loans (2) $6,453 $2,136
(1) Includes small business commercial – domestic loans of $205 million and $152 million at
December 31, 2008 and 2007.
(2) Includes performing commercial troubled debt restructurings of $13 million and $44 million at
December 31, 2008 and 2007.
Impaired loans include loans that have been modified in troubled debt
restructurings where concessions to borrowers who experienced financial
difficulties have been granted. Troubled debt restructurings typically result
from the Corporation’s loss mitigation activities and could include rate
reductions, payment extensions and principal forgiveness. Troubled debt
restructurings on commercial loans totaled $57 million and $74 million at
December 31, 2008 and 2007, of which $44 million and $30 million
were classified as nonperforming.
138 Bank of America 2008