Bank of America 2012 Annual Report Download - page 273

Bank of America 2012 271
NOTE 25 Merger and Restructuring Activity
Merger and restructuring charges are recorded in the Corporation’s
Consolidated Statement of Income and include incremental costs
to integrate the operations of the Corporation and its most recent
acquisitions. These charges represent costs associated with
these activities and do not represent ongoing costs of the fully
integrated combined organization. The table below presents the
components of merger and restructuring charges.
Merger and Restructuring Charges
(Dollars in millions) 2011 2010
Severance and employee-related charges $ 226 $ 455
Systems integrations and related charges 285 1,137
Other 127 228
Total merger and restructuring charges $ 638 $ 1,820
There were no merger and restructuring charges in 2012. For
2011, all merger-related charges related to the Merrill Lynch
acquisition. For 2010, merger-related charges include $1.6 billion
related to the Merrill Lynch acquisition and $202 million related
to earlier acquisitions.
The table below presents the changes in restructuring reserves
for 2012 and 2011. Restructuring reserves are established by a
charge to merger and restructuring charges, and the restructuring
charges are included in the table. Substantially all of the amounts
in the table relate to the Merrill Lynch acquisition.
Restructuring Reserves
(Dollars in millions) 2012 2011
Balance, January 1 $ 234 $ 336
Exit costs and restructuring charges —217
Cash payments and other (234) (319)
Balance, December 31 $—
$ 234
Amounts added to the restructuring reserves in 2011 related
to severance and other employee-related costs.
NOTE 26 Business Segment Information
The Corporation reports the results of its operations through five
business segments: Consumer & Business Banking (CBB),
Consumer Real Estate Services (CRES), Global Banking, Global
Markets and Global Wealth & Investment Management (GWIM), with
the remaining operations recorded in All Other.
Consumer & Business Banking
CBB offers a diversified range of credit, banking and investment
products and services to consumers and businesses. CBB product
offerings include traditional savings accounts, money market
savings accounts, CDs and IRAs, noninterest- and interest-bearing
checking accounts, investment accounts and products as well as
credit and debit cards in the U.S. to consumers and small
businesses. Customers and clients have access to a franchise
that stretches coast to coast through 32 states and the District
of Columbia. The franchise network includes approximately 5,500
banking centers, 16,300 ATMs, nationwide call centers, and online
and mobile platforms. CBB also offers a wide range of lending-
related products and services, integrated working capital
management and treasury solutions through a network of offices
and client relationship teams along with various product partners
to U.S.-based companies generally with annual sales of $1 million
to $50 million. CBB results are impacted by the migration of clients
and their deposit and loan balances between CBB and other client-
managed businesses. Subsequent to the date of migration, the
associated net interest income, noninterest income and
noninterest expense are recorded in the business to which the
clients migrated.
Consumer Real Estate Services
CRES provides an extensive line of consumer real estate products
and services to customers nationwide. CRES products include
fixed- and adjustable-rate first-lien mortgage loans for home
purchase and refinancing needs, HELOC and home equity loans.
First mortgage products are either sold into the secondary
mortgage market to investors, while generally retaining MSRs and
the Bank of America customer relationships, or are held on the
Corporation’s Consolidated Balance Sheet in All Other for ALM
purposes. HELOC and home equity loans are retained on the CRES
balance sheet. CRES services mortgage loans, including those
loans it owns, loans owned by other business segments and All
Other, and loans owned by outside investors.
The financial results of the on-balance sheet loans are reported
in the business segment that owns the loans or All Other. CRES
is not impacted by the Corporation’s first mortgage production
retention decisions as CRES is compensated for loans held for
ALM purposes on a management accounting basis, with a
corresponding offset recorded in All Other, and for servicing loans
owned by other business segments and All Other. CRES also
includes the impact of transferring customers and their related
loan balances between GWIM and CRES based on client
segmentation thresholds. Subsequent to the date of transfer, the
associated net interest income and noninterest expense are
recorded in the business segment to which loans were transferred.
Global Banking
Global Banking provides a wide range of lending-related products
and services, integrated working capital management and treasury
solutions to clients, and underwriting and advisory services
through the Corporation’s network of offices and client relationship
teams along with various product partners. Global Banking’s
lending products and services include commercial loans, leases,
commitment facilities, trade finance, real estate lending, asset-
based lending and direct/indirect consumer loans. Global
Banking’s treasury solutions business includes treasury
management, foreign exchange and short-term investing options.
Global Banking also works with clients to provide investment
banking products such as debt and equity underwriting and
distribution, and merger-related and other advisory services. The
economics of certain investment banking and underwriting
activities are shared primarily between Global Banking and Global
Markets based on the contribution by, and involvement of each
segment. Global Banking clients include middle-market
companies, commercial real estate firms, auto dealerships, not-
for-profit companies, federal and state governments,
municipalities, large global corporations, financial institutions and
leasing clients.