Bank of America 2010 Annual Report Download - page 120

Business Segment Operations
Deposits
Net income decreased $3.0 billion to $2.6 billion driven by lower net revenue
partially offset by an increase in noninterest expense. Net interest income
decreased $3.8 billion driven by lower net interest income allocation from
ALM activities and spread compression as interest rates declined. Noninter-
est income was essentially flat at $6.8 billion. Noninterest expense increased
$908 million to $9.5 billion primarily due to higher FDIC insurance including a
special FDIC assessment, partially offset by lower operating costs related to
lower transaction volume due to the economy and productivity initiatives.
Global Card Services
Net income decreased $6.8 billion to a net loss of $5.3 billion due to higher
provision for credit losses. Net interest income grew $667 million to $20.0 bil-
lion driven by increased loan spreads. Noninterest income decreased $2.6 bil-
lion to $9.1 billion driven by decreases in card income and all other income.
The decrease in card income resulted from lower cash advances, credit card
interchange and fee income. All other income in 2008 included the gain
associated with the Visa initial public offering (IPO). Provision for credit losses
increased $10.0 billion to $29.6 billion primarily driven by higher losses in the
consumer card and consumer lending portfolios from impact of the economic
conditions. Noninterest expense decreased $1.2 billion to $7.7 billion pri-
marily due to lower operating and marketing costs, and the impact of certain
benefits associated with the Visa IPO transactions.
Home Loans & Insurance
Home Loans & Insurance net loss increased $1.3 billion to a net loss of
$3.9 billion as growth in noninterest income and net interest income was
more than offset by higher provision for credit losses and an increase in
noninterest expense. Net interest income grew $1.7 billion driven primarily by
an increase in average LHFS and home equity loans. The growth in average
LHFS was a result of higher mortgage loan volume driven by the lower interest
rate environment. The growth in average home equity loans was attributable to
the migration of certain loans from GWIM to Home Loans & Insurance as well
as the Countrywide acquisition. Noninterest income increased $5.9 billion to
$11.9 billion driven by higher mortgage banking income which benefited from
the Countrywide acquisition and higher production income, partially offset by
higher representations and warranties provision. Provision for credit losses
increased $5.0 billion to $11.2 billion driven primarily by higher losses in the
home equity portfolio and reserve increases in the Countrywide home equity
PCI portfolio. Noninterest expense increased $4.7 billion to $11.7 billion
primarily driven by the Countrywide acquisition as well as increased costs
related to higher production volume.
Global Commercial Banking
Net income decreased $2.9 billion to a net loss of $290 million in 2009 as an
increase in revenue was more than offset by increased credit costs. Net
interest income was essentially flat at $8.1 billion. Noninterest income
increased $552 million to $3.1 billion largely driven by our agreement to
purchase certain retail automotive loans. The provision for credit losses
increased $4.5 billion to $7.8 billion, driven by reserve additions primarily
in the commercial real estate portfolio and higher net charge-offs across all
portfolios. Noninterest expense increased $501 million primarily attributable
to higher FDIC insurance, including a special FDIC assessment.
Global Banking & Markets
Global Banking & Markets recognized net income of $10.1 billion in 2009
compared to a net loss of $3.2 billion in 2008 as increased noninterest
income driven by trading account profits was partially offset by higher non-
interest expense. Sales and trading revenue was $17.6 billion in 2009
compared to a loss of $6.9 billion in 2008 primarily due to the addition of
Merrill Lynch. Noninterest income also included a $3.8 billion pre-tax gain
related to the contribution of the merchant processing business into a joint
venture. Noninterest expense increased $8.6 billion, largely attributable to
the Merrill Lynch acquisition.
Global Wealth & Investment Management
Net income increased $702 million to $1.7 billion in 2009 as higher total
revenue was partially offset by increases in noninterest expense and provi-
sion for credit losses. Net interest income increased $1.2 billion to $6.0 billion
primarily due to the acquisition of Merrill Lynch. Noninterest income increased
$8.6 billion to $10.1 billion primarily due to higher investment and brokerage
services income and the lower level of support provided to certain cash funds,
partially offset by the impact of lower average equity market levels and net
outflows primarily in the cash complex. Provision for credit losses increased
$397 million to $1.1 billion, reflecting the weak economy during 2009 which
drove higher net charge-offs in the consumer real estate and commercial
portfolios. Noninterest expense increased $8.3 billion to $12.4 billion driven
by the addition of Merrill Lynch and higher FDIC insurance, including a special
FDIC assessment, partially offset by lower revenue-related expenses.
All Other
Net income in All Other was $1.3 billion in 2009 compared to a net loss of
$1.1 billion in 2008 as higher total revenue driven by increases in noninterest
income, net interest income and an income tax benefit were partially offset by
increased provision for credit losses, merger and restructuring charges and all
other noninterest expense. Net interest income increased $1.5 billion prima-
rily due to unallocated net interest income related to increased liquidity driven
in part by capital raises during 2009. Noninterest income increased $8.2 bil-
lion to $10.6 billion driven by higher equity investment income including a
$7.3 billion gain on the sale of a portion of our CCB investment and gains on
sales of debt securities. These were partially offset by a $4.9 billion negative
valuation adjustment on certain structured liabilities. Provision for credit
losses was $8.0 billion in 2009 compared to $2.8 billion in 2008 primarily
due to higher credit costs related to our ALM residential mortgage portfolio.
Merger and restructuring charges increased $1.8 billion to $2.7 billion due to
the integration costs associated with the Merrill Lynch and Countrywide
acquisitions.
118 Bank of America 2010