Bank of America 2010 Annual Report Download - page 33

insurance claims in the U.K. that have not yet been asserted. Provision for
credit losses improved due to lower delinquencies and bankruptcies as a
result of the improved economic environment, which resulted in reserve
reductions in 2010 compared to reserve increases in the prior year. Non-
interest expense increased primarily due to the goodwill impairment charge.
Home Loans & Insurance net loss increased in 2010 compared to the
prior year primarily due to an increase in representations and warranties
provision and a $2.0 billion goodwill impairment charge, partially offset by a
decline in provision for credit losses driven by improving portfolio trends.
Mortgage banking income declined driven by increased representations and
warranties provision and lower production volume reflecting a drop in the
overall size of the mortgage market. Noninterest expense increased primarily
due to the goodwill impairment charge, higher litigation expense and an
increase in default-related servicing expense, partially offset by lower pro-
duction expense and insurance losses.
Global Commercial Banking net income increased due to lower credit
costs. Revenue was negatively impacted by additional costs related to our
agreement to purchase certain retail automotive loans. Net interest income
increased due to a growth in average deposits, partially offset by a lower net
interest income allocation related to ALM activities. Credit pricing discipline
offset the impact of the decline in average loan balances. The provision for
credit losses decreased driven by improvements from stabilizing values in the
commercial real estate portfolio.
GBAM net income decreased driven by the absence of the gain in the prior
year related to the contribution of our merchant processing business to a joint
venture. Additionally, the decrease was driven by lower sales and trading
revenue due to more favorable market conditions in the prior year, partially
offset by credit valuation gains on derivative liabilities and gains on legacy
assets compared to losses in the prior year. Provision for credit losses
declined driven by lower net charge-offs and reserve levels, as well as a
reduction in reservable criticized balances. Noninterest expense increased
driven by higher compensation costs as a result of the recognition of expense
on a proportionately larger amount of prior year incentive deferrals and
investments in infrastructure and personnel associated with further devel-
opment of the business. Income tax expense was adversely affected by a
charge related to the U.K. tax rate reduction impacting the carrying value of
deferred tax assets.
GWIM net income decreased driven by higher noninterest expense and the
tax-related effect of the sale of the Columbia Management long-term asset
management business partially offset by higher noninterest income and lower
credit costs. Revenue increased driven by higher asset management fees and
transactional revenue. Provision for credit losses decreased driven by stabi-
lization of the portfolios and the recognition of a single large commercial
charge-off in 2009. Noninterest expense increased due primarily to higher
revenue-related expenses, support costs and personnel costs associated
with further investment in the business.
All Other net income decreased compared to the prior year driven primarily
by decreases in net interest income and noninterest income, partially offset
by a lower provision for credit losses. Revenue decreased due primarily to
lower equity investment gains as the prior year included a gain resulting from
the sale of a portion of our investment in China Construction Bank (CCB)
combined with reduced gains on the sale of debt securities. The decrease in
the provision for credit losses was due to improving portfolio trends in the
residential mortgage portfolio.
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