Bank of America 2008 Annual Report Download - page 79

Table 30 Commercial Credit Exposure by Industry (1, 2)
December 31
Commercial Utilized Total Commercial Committed
(Dollars in millions) 2008 2007 2008 2007
Real estate
(3)
$ 79,766 $ 81,260 $103,889 $111,742
Diversified financials 50,327 37,872 103,306 86,118
Government and public education 39,386 31,743 58,608 57,437
Capital goods 27,588 25,908 52,522 52,356
Retailing 30,736 32,401 50,102 54,037
Healthcare equipment and services 31,280 24,337 46,785 40,962
Consumer services 28,715 23,382 43,948 38,650
Materials 22,825 22,176 38,105 38,717
Commercial services and supplies 24,095 21,175 34,867 31,858
Individuals and trusts 22,752 22,323 33,045 32,425
Food, beverage and tobacco 17,257 13,919 28,521 25,701
Banks 22,134 21,261 26,493 35,323
Energy 11,885 12,772 22,732 23,510
Media 8,939 7,901 19,301 19,343
Utilities 8,230 6,438 19,272 19,281
Transportation 13,050 12,803 18,561 18,824
Insurance 11,223 7,162 17,855 16,014
Religious and social organizations 9,539 8,208 12,576 10,982
Consumer durables and apparel 6,219 5,802 10,862 10,907
Technology hardware and equipment 3,971 4,615 10,371 10,239
Pharmaceuticals and biotechnology 3,721 4,349 10,111 8,563
Software and services 4,093 4,739 9,590 10,128
Telecommunication services 3,681 3,475 8,036 8,235
Food and staples retailing 4,282 3,611 7,012 6,465
Automobiles and components 3,093 2,648 6,081 6,960
Household and personal products 1,137 889 2,817 2,776
Semiconductors and semiconductor equipment 1,105 1,140 1,822 1,734
Other 7,720 7,617 8,142 7,715
Total commercial credit exposure by industry $498,749 $451,926 $805,332 $787,002
Net credit default protection purchased on total commitments
(4)
$ (9,654) $ (7,146)
(1) Total commercial utilized and total commercial committed exposure includes loans and letters of credit measured at fair value in accordance with SFAS 159 and are comprised of loans outstanding of $5.4 billion and
$4.6 billion and issued letters of credit at notional value of $1.4 billion and $1.1 billion at December 31, 2008 and 2007. In addition, total commercial committed exposure includes unfunded loan commitments at
notional value of $15.5 billion and $19.8 billion at December 31, 2008 and 2007.
(2) Includes small business commercial – domestic exposure.
(3) Industries are viewed from a variety of perspectives to best isolate the perceived risks. For purposes of this table, the real estate industry is defined based upon the borrowers’ or counterparties’ primary business
activity using operating cash flow and primary source of repayment as key factors.
(4) Represents net notional credit protection purchased.
Credit protection is purchased to cover the funded portion as well as
the unfunded portion of certain credit exposure. To lessen the cost of
obtaining our desired credit protection levels, credit exposure may be
added within an industry, borrower or counterparty group by selling pro-
tection.
At December 31, 2008 and 2007, we had net notional credit default
protection purchased in our credit derivatives portfolio to cover the funded
and unfunded portion of certain credit exposures of $9.7 billion and $7.1
billion. The mark-to-market impacts, including the cost of net credit
default protection, hedging our exposure, resulted in net gains of $993
million in 2008 compared to net gains of $160 million in 2007. The
average VAR for these credit derivative hedges was $24 million and $18
million for 2008 and 2007. The increase in VAR was driven by an
increase in the average amount of credit protection outstanding during
the year. There is a diversification effect between the net credit default
protection hedging our credit exposure and the related credit exposure
such that their combined average VAR was $22 million for 2008. Refer to
the Trading Risk Management discussion beginning on page 85 for a
description of our VAR calculation for the market-based trading portfolio.
Tables 31 and 32 present the maturity profiles and the credit
exposure debt ratings of the net credit default protection portfolio at
December 31, 2008 and 2007.
Table 31 Net Credit Default Protection by Maturity Profile (1)
December 31
2008 2007
Less than or equal to one year 1% 2%
Greater than one year and less than or equal to five years 92 67
Greater than five years 7 31
Total net credit default protection 100% 100%
(1) In order to mitigate the cost of purchasing credit protection, credit exposure can be added by selling credit protection. The distribution of maturities for net credit default protection purchased is shown as positive
percentages and the distribution of maturities for net credit protection sold as negative percentages.
Bank of America 2008 77