Bank of America 2012 Annual Report Download - page 127

Bank of America 2012 125
subsidiaries. These benefits were partially offset by the $782
million tax charge related to the enactment of a two percent
reduction in the U.K. corporate income tax rate. The effective tax
rate for 2010 excluding goodwill impairment charges was 8.3
percent. In addition to our recurring tax preference items, this rate
was driven by a $1.7 billion benefit from the release of a portion
of the valuation allowance applicable to the Merrill Lynch capital
loss carryover deferred tax asset, partially offset by the $392
million charge from a one percent reduction to the U.K. corporate
income tax rate enacted during 2010.
Business Segment Operations
Consumer & Business Banking
CBB recorded net income of $7.4 billion in 2011 compared to a
net loss of $5.1 billion in 2010 primarily due to a $10.4 billion
goodwill impairment charge in 2010 and a decrease in the
provision for credit losses, partially offset by a decline in revenue.
The decline in revenue was primarily driven by lower average loan
balances and yields, lower service charges reflecting the impact
of overdraft policy changes in conjunction with Regulation E that
were fully implemented during the third quarter of 2010, the
implementation of the Durbin Amendment in the fourth quarter of
2011, the gain on the sale of our MasterCard position in 2010
and the implementation of the CARD Act. The provision for credit
losses decreased $8.2 billion to $3.5 billion reflecting improving
economic conditions and lower loan balances. Noninterest
expense decreased $10.9 billion to $17.7 billion primarily due to
the goodwill impairment charge in 2010 and lower litigation and
operating expenses, partially offset by an increase in FDIC
expense.
Consumer Real Estate Services
CRES recorded a net loss of $19.5 billion in 2011 compared to
$8.9 billion in 2010 primarily due to an increase in representations
and warranties provision, lower core production income, a
decrease in insurance income due to the sale of Balboa in 2011,
and an increase in noninterest expense. Mortgage banking income
declined driven by the increased representations and warranties
provision and lower core production income due to a drop in market
share combined with the decline in the overall market demand for
mortgages in 2011. The provision for credit losses decreased $4.0
billion to $4.5 billion primarily driven by improving portfolio trends,
including lower reserve additions in the Countrywide PCI home
equity portfolio. Noninterest expense increased $7.0 billion to
$21.8 billion due to higher litigation expense, increased mortgage-
related assessments and waivers costs, higher default-related and
other loss mitigation expenses and a higher goodwill impairment
charge, partially offset by lower insurance and production
expenses.
Global Banking
Global Banking recorded net income of $6.0 billion in 2011
compared to $4.9 billion in 2010 primarily driven by lower provision
for credit losses, partially offset by lower revenue. Revenue
decreased $432 million to $17.3 billion primarily driven by lower
net interest income related to ALM activities and lower accretion
on acquired portfolios, partially offset by the impact of higher
average loan and deposit balances. The provision for credit losses
improved $2.4 billion to a benefit of $1.1 billion driven by the
positive impact of the economic environment on the credit portfolio
and an accelerated rate of loan resolutions in the commercial real
estate portfolio. Noninterest expense increased $215 million to
$8.9 billion as higher FDIC expense was partially offset by lower
personnel and occupancy expenses.
Global Markets
Global Markets recorded net income of $1.0 billion in 2011
compared to $4.3 billion in 2010 driven by a decline in sales and
trading revenue due to a challenging market environment, partially
offset by net DVA gains. Sales and trading revenue, excluding net
DVA, was $11.8 billion in 2011 compared to $16.4 billion in 2010.
Noninterest expense increased $470 million to $12.2 billion
primarily driven by increased costs related to investments in
infrastructure. Income tax expense included a $774 million charge
to reduce the carrying value of the deferred tax assets as a result
of a reduction in the U.K. corporate income tax rate enacted during
2011 compared to a charge of $388 million for a rate reduction
enacted in 2010.
Global Wealth & Investment Management
GWIM recorded net income of $1.7 billion in 2011 compared to
$1.3 billion in 2010 driven by higher asset management fees,
higher net interest income and lower credit costs, partially offset
by higher noninterest expense. Net interest income increased
$338 million to $5.9 billion as the impact of higher average deposit
balances more than offset the impact of a lower rate environment.
Noninterest income increased $774 million to $10.6 billion
primarily due to higher asset management fees driven by higher
average markets levels in 2011 compared to 2010 and continued
long-term AUM flows. The provision for credit losses decreased
$248 million to $398 million driven by improving portfolio trends.
Noninterest expense increased $1.1 billion to $13.4 billion due
primarily to higher volume-driven expenses and personnel costs
associated with the continued investment in the business.
All Other
All Other recorded net income of $4.7 billion in 2011 compared
to $1.3 billion in 2010 primarily due to higher noninterest income
and lower merger and restructuring charges. Noninterest income
increased $7.3 billion to $14.1 billion due to positive fair value
adjustments related to our own credit spreads on structured
liabilities of $3.3 billion in 2011 compared to $18 million in 2010.
Equity investment income increased $2.5 billion as a result of a
$6.5 billion gain from the sale of CCB shares partially offset by
$1.1 billion of impairment charges on our merchant services joint
venture and a decrease of $1.9 billion in GPI income. A goodwill
impairment charge of $581 million was recorded during 2011 as
a result of a change in the estimated value of the European
consumer card business. The prior year included $1.2 billion of
gains on the sales of certain strategic investments. The provision
for credit losses decreased $152 million to $6.2 billion primarily
due to divestitures, improvements in the non-U.S. credit card
portfolio and run-off, partially offset by the impact of a continuing
decline in home prices.