Bank of America 2008 Annual Report Download - page 5

lead the mortgage market to a healthier
and more stable future. Merrill Lynch,
I believe, is a tremendous long-term
strategic fit for our company, notwith-
standing the large losses they reported
in the fourth quarter largely due to
sharp writedowns in various capital
markets instruments.
I discuss both of these transactions
in more detail in a separate section of
this letter.
Our top priority right now, as the
economy continues to weaken, must
be to build on our capital strength, so
we’ll be in a good position to continue
to support customers and clients.
Bank of America has been a strong and
stable presence in the world’s financial
system since this crisis started almost
two years ago. The actions we’ve taken
will help us maintain and build on that
strength so that we can continue to
play a leading role in the economic
recovery to come.
Much has changed and much will
continue to change in our industry.
Consolidation within and across sec-
tors of the financial services industry
has all but stopped with the financial
sector in turmoil, but will accelerate
when the market stabilizes and assets
become easier to price. Old competi-
tors have disappeared, while new ones
are emerging. Structural and regulatory
changes are slowing or reversing the
evolution of the global markets. We
are heading toward a simpler, more
transparent financial services environ-
ment. And a smaller and more humble
financial services industry.
Despite all this change — and, in
some ways, encouraged by it — we
remain committed to our core vision for
this company. We are working to build
a global financial services company
that offers our customers and clients
unmatched convenience and expertise,
high-quality service and a variety of
financial products and services deliv-
ered as a single relationship.
Unlike many of our competitors
in the financial services industry, we
are well-capitalized, deposit-funded
and extremely liquid. We have one of
the largest, broadest customer bases
in the industry. We have a diverse
collection of market-leading businesses
that help support one another through
economic cycles. Most important,
we have a long history of managing
successfully through economic and
business challenges. I am confident
we will do so again.
Financial Results
The deepening recession provides
the context for our financial results.
In 2008, Bank of America earned
$4.01 billion, down from $14.98 billion
in 2007. Earnings after preferred
negotiated with the U.S. government
to invest another $20 billion in Bank of
America in the form of preferred stock.
I am very aware of the financial bur-
den our decisions have created for our
shareholders, but we felt it necessary
to maintain our capital strength and
stability in these uncertain times.
Despite a year with no shortage
of bad news, I maintain a positive
and optimistic outlook for our future.
Here’s why: For the full year, in
the midst of the worst recession in
generations, we earned more than
$4 billion, ranking us second among
all U.S. financial institutions. Two of
our three major lines of business made
money (Global Consumer & Small
Business Banking and Global Wealth &
Investment Management). And Global
Corporate & Investment Banking, which
has weathered so much of the capital
markets disruption this past year, came
very close to breaking even. The point is
that the potential earnings power of our
company is still huge, and still growing.
We made two key acquisitions.
Countrywide gives us an opportunity to
Total
Shareholders’
Equity
’06 ’07 ’08
In millions, at ye ar e nd
$135,272 $146,803
$177,052
Despite unprecedented
economic challenges,
Bank of America
earned more than
$4 billion in 2008
Strong
Earnings
Potential
Bank of America 2008 3