Bank of America 2008 Annual Report Download - page 48

December 31 Average Balance
(Dollars in millions) 2008 2007 2008 2007
Total loans and leases $ 89,400 $ 84,600 $ 87,591 $ 73,473
Total earning assets
(1)
178,240 145,056 160,699 126,014
Total assets
(1)
187,994 155,683 169,986 134,032
Total deposits 175,107 144,865 159,525 124,871
(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
needs 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 PB&I. In addition, ALM/Other
primarily includes the results of ALM activities.
On January 1, 2009, we acquired Merrill Lynch in exchange for common
and preferred stock with a value of $29.1 billion. The acquisition added Mer-
rill Lynch’s approximately 16,000 financial advisors and its economic owner-
ship of approximately 50 percent (primarily preferred stock) in BlackRock,
Inc., a publicly traded investment management company. For more
information related to the Merrill Lynch acquisition, see Note 2 – Merger and
Restructuring Activity to the Consolidated Financial Statements.
In December 2007, we completed the sale of Marsico. Prior year
Marsico business results have been transferred from GWIM to All Other to
better facilitate year-over-year comparisons.
Net income decreased $544 million, or 28 percent, to $1.4 billion in
2008 as increases in net interest income and investment and brokerage
services income were more than offset by losses associated with the
support provided to certain cash funds managed within Columbia,
increases in provision for credit losses and noninterest expense as well
as losses related to the buyback of ARS.
Net interest income increased $858 million, or 22 percent, to $4.8
billion due to higher margin on ALM activities, the acquisitions of U.S.
Trust Corporation and LaSalle, and growth in average deposit and loan
balances partially offset by spread compression driven by deposit mix and
competitive deposit pricing. GWIM average deposit growth benefited from
the migration of customer relationships and related balances from
GCSBB, organic growth and the U.S. Trust Corporation and LaSalle
acquisitions. A more detailed discussion regarding migrated customer
relationships and related balances is provided in the PB&I discussion on
page 47.
Noninterest income decreased $626 million, or 17 percent, to $3.0
billion driven by an additional $1.1 billion in losses during 2008 related
to the support provided to certain cash funds managed within Columbia
and losses of $181 million related to the buyback of ARS. These losses
were partially offset by an increase of $278 million in investment and
brokerage services resulting from the U.S. Trust Corporation acquisition
partially offset by the impact of significantly lower valuations in the equity
markets.
Provision for credit losses increased $650 million to $664 million as
a result of higher credit costs primarily in PB&I due to the deterioration in
the housing markets and the impacts of a slower economy.
Noninterest expense increased $424 million, or nine percent, to $4.9
billion due to the addition of U.S. Trust Corporation and LaSalle, and
higher initiative spending partially offset by lower discretionary incentive
compensation.
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) 2008 2007
Assets under management $523,159 $643,531
Client brokerage assets 172,106 222,661
Assets in custody 133,726 167,575
Less: Client brokerage assets and assets in
custody included in assets under management (78,487) (87,071)
Total net client assets $750,504 $946,696
AUM decreased $120.4 billion, or 19 percent, to $523.2 billion as of
December 31, 2008 compared to 2007. Client brokerage assets
decreased by $50.6 billion, or 23 percent, and assets in custody
decreased $33.8 billion, or 20 percent. These decreases were driven by
significant market declines.
U.S. Trust, Bank of America Private Wealth
Management
In July 2007, the acquisition of U.S. Trust Corporation was completed for
$3.3 billion in cash combining it with the Private Bank 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 solutions to meet clients’ wealth structuring, investment
management, trust and banking needs as well as specialty asset
management services (oil and gas, real estate, farm and ranch, timber-
land, 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 decreased $10 million, or two percent, to $460 million
compared to 2007, as higher net interest income and noninterest income
were more than offset by higher noninterest expenses and provision for
credit losses. Net interest income increased $204 million, or 20 percent,
due to the U.S. Trust Corporation and LaSalle acquisitions as well as
organic growth in average deposits and average loans and leases. This
growth was partially offset by spread compression, driven by deposit mix
and competitive deposit pricing. Noninterest income increased $126 mil-
lion, or 10 percent, driven by higher investment and brokerage services
income due to the acquisitions which was partially offset by the impact of
significantly lower valuations in the equity markets. In addition, non-
interest income was impacted by $50 million in losses related to the
buyback of ARS previously discussed. Provision for credit losses
increased $117 million to $103 million compared to the same period in
46 Bank of America 2008