Bank of America 2008 Annual Report Download - page 28

Balance Sheet Analysis
Table 4 Selected Balance Sheet Data
December 31 Average Balance
(Dollars in millions) 2008 2007 2008 2007
Assets
Federal funds sold and securities purchased under agreements to resell $ 82,478 $ 129,552 $ 128,053 $ 155,828
Trading account assets 159,522 162,064 193,631 187,287
Debt securities 277,589 214,056 250,551 186,466
Loans and leases, net of allowance for loan and lease losses 908,375 864,756 893,353 766,329
All other assets 389,979 345,318 378,391 306,163
Total assets $1,817,943 $1,715,746 $ 1,843,979 $1,602,073
Liabilities
Deposits $ 882,997 $ 805,177 $ 831,144 $ 717,182
Federal funds purchased and securities sold under agreements to repurchase 206,598 221,435 272,981 253,481
Trading account liabilities 57,287 77,342 75,270 82,721
Commercial paper and other short-term borrowings 158,056 191,089 182,729 171,333
Long-term debt 268,292 197,508 231,235 169,855
All other liabilities 67,661 76,392 85,789 70,839
Total liabilities 1,640,891 1,568,943 1,679,148 1,465,411
Shareholders’ equity 177,052 146,803 164,831 136,662
Total liabilities and shareholders’ equity $1,817,943 $1,715,746 $ 1,843,979 $1,602,073
At December 31, 2008, total assets were $1.8 trillion, an increase of
$102.2 billion, or six percent, from December 31, 2007. The increase in
total assets was primarily attributable to the acquisition of Countrywide,
which impacted various line items including loans and leases, debt secu-
rities, MSRs and other assets. In addition to Countrywide, debt securities
also increased due to net purchases of securities and the securitization
of residential mortgage loans into mortgage-backed securities which we
retained. Derivative assets, which are included in all other assets in the
table above, increased due to mark-to-market gains resulting from the
reduced interest rate environment and the strengthening of the U.S. dollar
versus certain foreign currencies. Partially offsetting these increases was
a decrease in federal funds sold and securities purchased under agree-
ments to resell primarily attributable to balance sheet efficiencies and the
sale of our equity prime brokerage business.
Average total assets in 2008 increased $241.9 billion, or 15 percent,
from 2007 primarily due to higher loans and leases and debt securities.
The increase in average loans and leases was attributable to organic
growth and the Countrywide and LaSalle acquisitions. The increase in
debt securities was driven by the same factors as noted above and the
LaSalle acquisition.
At December 31, 2008, total liabilities were $1.6 trillion, an increase
of $71.9 billion from December 31, 2007. The increase in total liabilities
was attributable to the acquisition of Countrywide which impacted various
line items including deposits and long-term debt. In addition to Country-
wide, deposits increased as we benefited from a consumer and business
flight-to-safety resulting from market instability. Long-term debt increased
due to the addition of Countrywide and participation in the TLGP. Partially
offsetting these increases was a decrease in commercial paper and other
short-term borrowings due in part to the sale of our equity prime broker-
age business.
Average total liabilities for 2008 increased $213.7 billion, or 15 per-
cent from 2007. The increase in average total liabilities was attributable
to higher deposits and long-term debt to support growth in overall assets
and the inclusion of liabilities associated with the Countrywide and
LaSalle acquisitions.
Federal Funds Sold and Securities Purchased Under
Agreements to Resell and Trading Account Assets
Federal funds sold and securities purchased under agreements to resell
consist of excess reserves placed with other banks with a relatively short-
term maturity and securities that have been purchased subject to an
agreement to resell securities with substantially identical terms at a
specified date for a specified price. Trading account assets consist pri-
marily of fixed income securities (including government and corporate
debt), equity and convertible instruments. Period end and average federal
funds sold and securities purchased under agreements to resell, and
trading account assets decreased $49.6 billion and $21.4 billion in
2008, attributable to balance sheet efficiencies and the sale of our equity
prime brokerage business partially offset by an increase in the amount of
our securities used to hedge our MSRs. For additional information, see
Market Risk Management beginning on page 84.
Debt Securities
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 debt securities portfolio primarily to
manage interest rate and liquidity risk and to take advantage of market
conditions that create more economically attractive returns on these
investments. The period end and average balances in the debt securities
portfolio increased $63.5 billion and $64.1 billion from 2007 due to net
purchases of securities and the securitization of residential mortgage
loans into mortgage-backed securities which we retained. These
increases were also impacted by the addition of Countrywide. In addition,
average balances benefited from the full year impact of the LaSalle
acquisition. For additional information on our AFS debt securities portfo-
lio, see Market Risk Management – Securities on page 89 and Note 5 –
Securities to the Consolidated Financial Statements.
26 Bank of America 2008