RESPONSE TO REQUEST FOR PROPOSAL FOR BANKING SERVICES RFP NUMBER 27-05,�_
BankofAmerica �Higher Standards
��i �� �'
' •`'' � .� _
+"' R' � � 3:�--
j�> .,;'- i
� �� � �
City of Clearwater
Response to Request for Proposal
for Banking Services
Request for Proposal (RFP) # 27-OS June 1, 2005
.
.
Response to the Request for Proposal for
City of Clearwater
Table of Contents
BankofAmerica�''
�
Table of Contents
ExecutiveSummary ............................................................................................ 2
Response Form — Pricing .................................................................................. 4
BankContacts .................................................................................................. 23
Scope of Banking Services .............................................................................. 27
A. Main Operating Account : ..................................................................... 27
B. Payroll Account :................................................................................... 28
C. Bank Statements :................................................................................. 30
D. Coin Deposits : ..................................................................................... 30
E. Lock Box Services : .............................................................................. 31
F. I nvestments : ........................................................................................ 33
G. Securities Lending : .............................................................................. 34
H.
I .
J.
Public Depository - Collateral :.............................................................. 34
WebBased Bank : ................................................................................ 34
Overnight Repurchase Agreement Sweep Account :............................ 42
K. Disasters :.............................................................................................43
L. ACH Services : ..................................................................................... 43
M
N
O.
P.
Q.
R.
S.
T.
U.
V.
W,
Deposits by Armored Car Service :....................................................... 43
Payment for Services :.......................................................................... 44
Designated Bank Contact Personnel : .................................................. 44
References: ......................................................................................... 44
WrittenContract :..................................................................................45
FirmPrices :..........................................................................................46
Cashing Petty Cash and Change Fund Checks :.................................. 46
Employee Benefit Package :.................................................................46
CheckCashing : ................................................................................... 47
PurchasingCards : ...............................................................................47
Check21 :............................................................................................. 49
X. Accepting Credit Cards as Payment .................................................... 51
Additional Information and Services .............................................................. 52
Attach ments ...................................................................................................... 59
Response to RFP #27-05 for the City of Clearwater
Page 1
.
.
Response to the Request for Proposal for
City of Clearwater
Executive Summary
BankofAmeric �''
�
Executive Summary
Bank of America is excited at the opportunity to participate in this Request for Proposal
for Banking Services. We have thoroughly reviewed the requirements specified, and are
confident that we can continue to meet all of the City's requirements and successfully
deliver the best products and services to the City of Clearwater. Bank of America is
uniquely positioned to deliver the latest in financial products and services while still
maintaining the one-on-one Banking relationship that our Clients desire. Bank of
America's extensive experience with government clients around the state of Florida will
give the City a proven partner that can deliver a great benefit. Outlined below is a
sampling of the many municipalities we bank across the state:
City of St. Petersburg City of Dunedin
City of Tampa City of Madeira Beach
City of Tarpon Springs City of Treasure Island
City of Bradenton City of Ft Myers
City of Punta Gorda City of Jacksonville
Outlined below are highlights of the benefits we are prepared to offer you.
Pricing - We have provided a very aggressive and competitive pricing schedule for the
comprehensive treasury management services the City is accustomed to.
Overnight Investments — Bank of America will provide our Public Funds Interest
Checking (PFIC) account at a rate of Effective Fed Funds minus 0 basis points. The
City's accounts will continue to earn interest on 100% of the collected balances in the
PFIC account. This is a net rate, which means that we will pay interest on the City's
accounts without deduction of a 10% reserve factor to provide maximum value for
your overnight investment balances.
Footprint — Please see the "AttachmenY' section for a listing of Bank of America
banking centers in Pinellas County.
Client Team Approach — Bank of America's mission is to provide our clients
exceptional service through a Client Team approach. Your team members at Bank of
America are dedicated to servicing the unique needs of governmental entities.
Response to RFP #27-05 for the City of Clearwater
Page 2
•
.
Response to the Request for Proposal for
City of Clearwater
BankofAmeric �';'
�
Executive Summary
Dedicated Customer Service Representative — The City will continue to have a
dedicated representative at our Commercial Contact Center, located in Jacksonville,
who will assist in handling all day-to-day customer service inquiries.
Technical Consultant - Bank of America will provide a dedicated Technical Consultant
to assist the City in the technical aspects of implementing any new services and
integration with your systems.
Financial Responsibility - Bank of America remains one of the strongest banks in the
marketplace by all measures including banking center coverage, net income, total assets,
deposits, credit rating, and key relationships. Powered by our capital strength and built-
in safeguards, we continue to provide the safest place for the City to bank. We have the
financial strength to deliver comprehensive Treasury Management solutions and are
recognized as an industry leader. In Fortune magazine's March issue- 23rd annual
Most Admired list, Bank of America was ranked #1 out of all banks in the nation.
Please see the "Attachment" section far a reprint of the article.
State Contracts — Bank of America is continually developing new solutions to meet the
financial needs of our clients. Bank of America was awarded the State of Florida
Purchasing Card Contract (renewed for an additional five years in July 2002) and we
were awarded the State of Florida Contract for Electronic Payments and Merchant Credit
Card acceptance in 2001.
Our Bank of America team is prepared to address and exceed the requirements of this
Request for Proposal. We are excited about the opportunity to continue to work with the
City and look forward to bringing new ideas and innovative solutions to meet your
changing needs.
Response to RFP #27-05 for the City of Clearwater
Page 3
��
�_J
Response to the Request for Proposal for
City of Clearwater
Response Form - Pricing
City of Clearwater
' RFP for Banking Services RFP Response Form
' Monthly Banking Costs
BankofAmeric �''
I
Response Form - Pricing
Pricing Option # 1- We would like to offer the pricing below as a package deal with an
overnight investment rate in PFIC of EFF +2 basis pts.
_
_
Monthly ' Monthly
' Volume Unit Price Cost
' Basic Services:
___
' , FDIC Insurance Charge per 1000 of
' eom ledger bal.
Deposited Services:
Account Maintenance
Banking Center Deposits
' ' Night Drop Deposits
', Vault Deposits
Item Processing Deposit
Deposit Posts Other
', Non-Cash Deposit Corrections
,
' General Checks Paid Not Truncated
', ZBA Service-Master
�I ZBA Service-Sub
ERIN Return Item
'� ' Returns-Chargeback
I�
Returns-Reclear
' Deposit Items on Winning Bank
_ _
! Deposit Items Local Clearing
, '' Deposit Items in District Fed
�,
', '', Deposit Items All Others
! Encoding charge
; CKS Deposited Foreign Items
• ' CKS Deposit Rejects
Response to RFP #27-05 for the City of Clearwater
0.0118 ' $ 55.35 '
4,691,828
2 $ 10.0000 ''; $ 20.00
501 $ 0.2000 $ 100.20
271 $ 0.2000 ; $ 54.20
96 $ 0.2000 ; $ 19.20
80 $ 0.2000 ' $ 16.00 '
3 $ 0.2000 ', $ 0.60 '
5 $ _ $ _'.
3574 $ 0.0650 ' ' $ 232.31
1 $ _ � -
1_ $ _, , $ -
139 $ 1.2500 ' $ 173.75 '
59 $ 1.2500 $ 73.75 ',
80 $ 1.0000 $ 80.00 !,
-
$ OA150 $ 139.77 '�,
9,318 ' '
$ 0.0200 $ 165.38 '�
8,269
16,789
7,433
9,044
29 '
80
$ 0.0400
$ 0.0450
$ 671.56
$ 334.49
$ 0.0150 $ 135.66
$ 0.1100 $ 3.19 '
$ 0.1000 '
$ 8.00
Page 4
�
�
Response to the Request for Proposal for
City of Clearwater
BankofAmeric �''
I
Response Form - Pricing
_ ___
_
City of Clearwater
' RFP for Banking Services RFP Response Form
_ __
Monthly Banking Costs '
_ _ __ ,
', Pricing Option # 1- We would like to offer the pricing below as a package deal with an '
overnight investment rate in PFIC of EFF +2 basis pts.
_ Monthly Monthly '�
Volume Unit Price Cost ',
Electronic Debit $ 0.0500 $ 3.45 '
69 '
Credit Posted Other ', 1 $ 0.0500 $ 0.05
_ __
', Electronic Credit , $ 0.0500 $ 20.25 '
' 405
_
I Lockbox Services: '
RTL LBX Maintenance 1'', $ 125.00 '
�� $ 125.00
I RTL LBX-Matched $ 0.12 ' $ 2,753.16
22,943 ' I
', RTL LBX-Unmatched 1942 ' $ 0.14 $ 271.88 '�,
RTL LBX-Multiple 2516 $ - ', $ - '',
_ RTL LBX-Check Only 4270 $ - $ - !,
__
_
, RTL LBX-Rejects 4496 $ 0.10 ' ' $ 449.60
' RTL LBX-Cash 3 $ 8.00 $ 24.00 '
' Expedited Deposits - Express 249 $ 2.50 ', ' $ 622.50
RTL LBX Photocopy - Manual 4270 $ 0.30 ', ' $ 1,281.00
; _ _ __
', ' RTL LBX Research 8 $ - ' $ -
' '� RTL LBX-Data Trans 1 $ 150.00 ' $ 150.00
' RTL LBX-Data Trans 31671 $ 0.005 ' $ 158.36 '
RTL LBX DTRPT 1 $ 50.00 ' ' $ 50.00 '
I 'I
�, Commercial Deposits Cash Vault: '
Envelope Deposit-With Detail ' $ 1.0000 $ 103.00 ''�
�' ,
' 103
', CURR/COIN DEP/$100 QBD-ND
� CURR/COIN DEP/$100 BKG CTR
', ', CURR/COIN DEP/$100 VLT
' Coin Dep Non Standard Bag
', Deposit Correction-Cash
Response to RFP #27-05 for the City of Clearwater
$ 0.0950 $ 362.14 '
3,812
$ 0.0950 $ 233.04 '.
2,453 ,
$ 0.0950 $ 342.86 '
3,609 '
$ _ _ $ ___
74 $ 2.0000 ' $ 8.00 '
Page 5
�
•
Response to the Request for Proposal for
City of Clearwater
BankofAmeric �'��
I
Response Form - Pricing
_ _
' City of Clearwater '
__
RFP for Banking Services RFP Response Form '
Monthly Banking Costs
, Pricing Option # 1- We would like to offer the pricing below as a package deal with an
', overnight investment rate in PFIC of EFF +2 basis pts.
Monthly , Monthly
, _ Volume Unit Price , Cost
Coin Dep Standard Bag $ _ $ -
! ' 23 ' '
� COIN Supplied/Roll- BNK CTR $ 0.0800 I $ 0.80 '
�
10 ' '
Change Order BNK CTR 5 $ 2.2000 ', $ 11.00 '
_
, Currency Supp/$100- BHK CTR 8 $ 0.0900 $ 0.72
' General ACH Services: '
, ACH OPTIONAL REPORTS- 13 $ 1.0000 ', $ 13.00
! Electronic
, ', ACH Return ITEM-NOC 34 $ 1.5000 ', $ 51.00
' ACH Maintenance 3 $ 13.0000 ' , $ 39.00 '
' ACH INPUT-PC DIRECT 3 $ 7.0000 ' $ 21.00 '
', Data Transmission $ 5.0000 $ 90.00 '�
,' 18 ' '
�,
ACH Standard Reports 18 ',
$ 2.0000 $ 36.00 ',
' ', Consumer On Winning Bank CR 961 ' ' $ 0.0700 $ 67.27 ',
' ', Consumer Off Winning Bank CR 4606 ' $ 0.0700 ' $ 322.42 '
'�� Consumer On Winning Bank DR 1198 ' $ 0.0700 $ 83.86
' '�, Consumer Off Winning Bank DR 2994 $ 0.0700 $ 209.58 '
Wire Transfer: '
_
', '; ELEC WIRE OUT - DOMESTIC $ 6.0000 ', ' $ 228.00
,' ' 38 '
'', ' ELEC WIRE OUT - BOOK DB 9 $ 3.0000 $ 27.00 '
'I ' Incoming domestic wire 1 $ 6.0000 $ 6.00 ',
Manual Wire Out - Domestic 3 $ 9.0000 $ 27.00 '
' BNK Maintain template Storage 5 $ - $ -
' Account Reconciliation:
! CD ROM Maintenance 2 $ 25.0000 ', $ 50.00
$ 10.00 '.
CD ROM Disk 1 $ 10.0000 ' _
', , CD ROM Item , $ 0.0350 ', $ 125.20
' _ 3,577 ',
Response to RFP #27-05 for the City of Cleanivater Page 6
Response to the Request for Proposal for
City of Clearwater
BankofAmeric �''
I
• Response Form - Pricing
City of Clearwater
I
RFP for Banking Services RFP Response Form
' Monthly Banking Costs
_
; Pricing Option # 1- We would like to offer the pricing below as a package deal with an ;
', overnight investment rate in PFIC of EFF +2 basis pts.
Monthly Monthly j
_ Volume Unit Price , Cost '
__
Full Maintenance 2' $ 40.0000 '' $ 80.00 '
Full Recon Input Trans (per item) $ 0.0500 ' ', $ 193.50 '
' ' 3,870
'' Full Recon Input Trans (output file) 1 $ 7.0000 ' i $ 7.00
_
' Full PPAY Account 2 $ - $ -
- _
FULL PPAY ITEM $ - ', $ -
3,573 ', ,
Information Services: I
� E+W Previous Day Maint-Mo( B of A 1 $ - $ -
Direct)
_
•E+W Current Day Maint-Mo(B of A 1 $ -' $ -
�� Direct) �
', ' E+W Current Day Detail Item(B of A $ 0.0400 , $ 54.80 '
' Direct) 1,370 ' '
�� E+W Per Acct Maintaince-Mo(B of A 2 $ _ $ _,
Direct)
i� E+W Previous Day Detail Item B of A $ 0.0400 ' $ 222.40
,
' Direct) 5,560
�
Terminal Stop Pay 2 $ 5.0000 $ 10.00
' Terminal Stop Pay Inquiry-Cancel 5 , $ - ' $ - ,
''�, Special Report Maint-Month 1' $ 25.0000 $ 25.00 ',
�
, ; _ ,
EDI Services:
' Receiving-Advising-Fax 26 $ 1.0000 ' $ 26.00 ''
Receiving-Advising-Fax Maint 1 $ 10.0000 $ 10.00 '
International: '
' ' International Wire-Out Non-Repeative 1 $ 10.0000 $ 10.00 '
' Miscellaneous:
' CPA Confirmation 1 $ - $ -
• �,
Response to RFP #27-05 for the City of Clearwater Page 7
•
.
Response to the Request for Proposal for
City of Clearwater
BankofAmeric �'��
I
Response Form - Pricing
_
' City of Clearwater
RFP for Banking Services RFP Response Form
Monthly Banking Costs
' Pricing Option # 1- We would like to offer the pricing below as a package deal with an
overnight investment rate in PFIC of EFF +2 basis pts.
' Monthly , Monthly
Volume Unit Price Cost
�! Total $ 11.299.23
PCard Rebate rate to City
Stand-alone Pricing:
' Purchase Card
Volume Tiers
Excludes Large Ticket
$0
$1,000,000
$3,000,000
$6,000,000 _
$9,000,000
' $12,000,000
' $15,000,000
_ _ $20,000,000
40 basis points*
"current State contract
$ -
$999,999
$2,999,999
$5,999,999
$8,999,999
$11,999, 999
$14,999,999 I
$19,999,999
+
', 30 day Cycle
14 days Grace
40
50
60
65
70
75
80 I
Transactions that qualify for Large Ticket Interchange Qualification
will be eligible for a Large Ticket Rebate based on the following schedule,
provided the Large Ticket Qualified Transactions do not exceed 50% of total
volume and the Standard Volume qualifies for rebate
Large Ticket Volume
Not to Exceed 50%
of total Card volume
$0
$1,500,000
$5,000,000
$20,000,000
Response to RFP #27-05 for the City of Clearwater
$1,499,999
$4,999,999
$19,999,999
+
Page 8
�
�1
Response to the Request for Proposal for
City of Clearwater
Security Lending Split to City (i.e. 70%) Not Applicable
Estimate Annual Income to City $ -
BankofAmeric �'��
I
Response Form - Pricing
Credit Card Processing Fees
Visa Percentage Transaction Fee
Interchange (Retail2: Emerging Market)* 1.43% $0.05
Visa Dues 8� Assessments 0.09%
Bank of America Fees 0.07% $0.15
MasterCard
Interchange (Public Sector)"
MasterCard Dues & Assessments
Bank of America Fees
1.55%
0.07%
$0.10
$0.15
*- Other Interchange categories may apply. Complete Interchange charts are included
with this response in the "Attachments" section.
Response to RFP #27-05 for the City of Clearwater Page 9
i
•
Response to the Request for Proposal for
City of Clearwater
BankofAmeric �'��
l
Response Form - Pricing
City of Clearwater
_
; RFP for Banking Senrices RFP Response Form
-
Monthly Banking Costs
Pricing Option # 2- As a second option we would like to offer the pricing below as a package deal
with an overnight investment rate in PFIC of EFF - 0 basis pts. '
Monthly Monthly
' Volume Unit Price ', Cost ',
', Basic Services: , , ,
FDIC Insurance Charge per 1000 of eom ', 0.0118 $ 55.35
' ledger bai. 4,691,828 '
, Deposited Services: , _ '�,
Account Maintenance 2 $ 10.0000 $ 20.00 !
Banking Center Deposits 501 $ 0.2000 ' $ 100.20
Night Drop Deposits 271 $ 0.2000 ', $ 54.20
Vault Deposits 96 $ 0.2000 $ 19.20
Item Processing Deposit 80 ' $ 0.2000 '$ 16.00
Deposit Posts Other ' 3 $ 0.2000 '$ 0.60
Non-Cash Deposit Corrections 5 , $ - $ -
General Checks Paid Not Truncated 3574 ' ' $ 0.0650 $ 232.31
, ZBA Service-Master 1 $ _ $
, ZBA Senrice-Sub � $ _ � _
ERIN Return Item 139 $ 1.2500 $ 173.75 �
Retums-Chargeback 59 $ 1.2500 $ 73.75 ;
Returns-Reclear 80 $ 1.0000 , ,$ 80.00 1
I Deposit Items on Winning Bank , $ 0.0150 ', $ 139.77 '
' 9,318 ',
Deposit Items Local Clearing $ 0.0200 $ 165.38
', 8,269
', Deposit Items in District Fed $ 0.0300 , $ 503.67 ;
' 16,789 �'
�� Deposit Items All Others $ 0.0400 ' $ 297.32 I�!
7,433 ,
Encoding charge ' $ 0.0150 I $ 135.66 I
9,044 '
CKS Deposited Foreign Items $ 0.1100 $ 3.19 ;
_ _
29 '� '��
CKS Deposit Rejects $ 0.1000 ', $ 8.00
' 80 '
', Electronic Debit $ 0.0500 ' $ 3.45
69
', ', Credit Posted Other $ 0.0500 $ 0.05 ;
1 ' '
I Electronic Credit $ 0.0500 $ 20.25 �,
I _ 405 ' '
Response to RFP #27-05 for the City of Clearwater Page 10
�
•
Response to the Request for Proposal for BankofAmeric �`�
City of Clearwater �I
Response Form - Pricing
__ _
City of Clearwater
�
RFP for Banking Services RFP Response Form
Monthly Banking Costs
-_ ,
Pricing Option # 2- As a second option we would like to offer the pricing below as a package deal '�
; with an overnight investment rate in PFIC of EFF - 0 basis pts. '
Monthly Monthly
Volume Unit Price Cost
' Lockbox Services:
' RTL LBX Maintenance $ 125.00 $ 125.00
1
RTL LBX-Matched $ 0.12 $ 2,753.16 ',
22,943 ' ' ',
', RTL LBX-Unmatched 1942 $ 0.14 $ 271.88 I
RTL LBX-Multiple 2516 $ - $ _ '
I RTL LBX-Check Only 4270 $ - ' $ -,
'; RTL LBX-Rejects 4496 $ 0.10 $ 449.60 !
; ; RTL LBX-Cash 3 $ 8.00 $ 24.00 '
', Expedited Deposits - Express 249 $ 2.50 ', $ 622.50
� RTL LBX Photocopy - Manual 4270 $ 0.30 ', $ 1,281.00 '
' ', RTL LBX Research 8 $ - $ -
, RTL LBX-Data Trans $ 150.00 $ 150.00
', �
', RTL LBX-Data Trans 31671 $ 0.005 ,$ 158.36
RTL LBX DTRPT $ 50.00 $ 50.00 I
1'
Commercial Deposits Cash Vault:
, Envelope Deposit-With Detail
, CURR/COIN DEP/$100 QBD-ND
! CURR/COIN DEP/$100 BKG CTR
I CURR/COIN DEP/$100 VLT
; Coin Dep Non Standard Bag
Deposit Correction-Cash
Coin Dep Standard Bag
', COIN Supplied/Roll- BNK CTR
Change Order BNK CTR
_
Currency Supp/$100- BHK CTR
Response to RFP #27-05 for the City of Clearwater
103
3,812
2,453
3,609
78
4
23
, $ 1.0000
$ 0.0900
$ 0.0950
$ 0.0900
$ -
$ 103.00
$ 343.08
$ 233.04 ;
$ 324.81 !,
�
$ _!i
$ 1.5000 $ 6.00 ;
$ _ � _;I
; '
$ 0.0800 ' $ 0.80 '
10 ' '
$ 2.0000 I $ 10.00
5
$ 0.0900 ' $ 0.72
8 '
Page 11
•
Response to the Request for Proposal for BankofAmeric ���
City of Clearwater �I
Response Form - Pricing
_
' City of Clearwater
_
' RFP for Banking Services RFP Response Form
Monthly Banking Costs
Pricing Option # 2- As a second option we would like to offer the pricing below as a package deal ,
with an overnight investment rate in PFIC of EFF - 0 basis pts.
Monthly Monthly '',
' Volume Unit Price Cost '
I General ACH Services:
! ACH OPTIONAL REPORTS-Electronic 13 $ 1.0000 $ 13.00
ACH Return ITEM-NOC 34 $ 1.5000 $ 51.00 ,
; ACH Maintenance 3 $ 13.0000 , $ 39.00 '
' ACH INPUT-PC DIRECT 3 $ 7.0000 ', $ 21.00
' Data Transmission $ 5.0000 $ 90.00
�i 18
�' ACH Standard Reports 18 $ 2.0000 $ 36.00
', Consumer On Winning Bank CR 961 $ 0.0550 ! $ 52.86 '
' Consumer Off Winning Bank CR 4606 $ 0.0550 ' ', $ 253.33 ',
Consumer On Winning Bank DR 1198 $ 0.0550 '$ 65.89
Consumer Off Winning Bank DR 2994 ' $ 0.0550 ', $ 164.67
Wire TELEC WIRE OUT - DOMESTIC $ 6.0000
$ 228.00
38
ELEC WIRE OUT - BOOK DB $ 3.0000 $ 27.00
9 '
, Incoming domestic wire $ 6.0000 $ 6.00
I 1
' ', Manual Wire Out - Domestic $ 9.0000 $ 27.00 '
3
BNK Maintain template Storage $ - $
I
' Account Reconciliation:
CD ROM Maintenance
! ' CD ROM Disk
�
CD ROM Item
Full Maintenance
Full Recon Input Trans (per item)
' Full Recon Input Trans (output file)
; Full PPAY Account
• FULL PPAY ITEM
Response to RFP #27-05 for the City of Clearwater
5
$ 25.0000 $ 50.00
2
$ 10.0000 $
1
$ 0.0200 $
3,577
$ 40.0000 $
2
3,870
1
2
3,573
$ 0.0450 $
$ 7.0000
$ -
$ _
10.00 i
71.54 ''
80.00 '
174.15 '
$ 7.00
$ _
$ _
Page 12
i
•
Response to the Request for Proposal for
City of Ciearwater
BankofAmeric �'��
I
Response Form - Pricing
City of Clearwater
RFP for Banking Services RFP Response Form �
' Monthly Banking Costs i
_
' Pricing Option # 2- As a second option we would like to offer the pricing below as a package deal '
with an overnight investment rate in PFIC of EFF - 0 basis pts. '
_. _ _
Monthly Monthly
Volume ' Unit Price Cost
' Information Services:
E+W Previous Day Maint-Mo( B of A $ - $ _
i Direct) �
E+W Current Day Maint-Mo(B of A Direct) $ $
', 1 , �' �, I
' , E+W Current Day Detail Item(B of A $ 0.0200 ' ,$ 27.40
_ ' Direct) 1,370
E+W Per Acct Maintaince-Mo(B of A $ 10.0000 $ 20.00
Direct) 2 ,
E+W Previous Da Detail Item B of A '
, Y $ 0.0200 ' $ 111.20 '',
' Direct) 5,560 ' ' I
j Terminal Stop Pay $ 5.0000 '$ 10.00 '
' 2
,' Terminal Stop Pay Inquiry-Cancel $ - I $ _'
5 '
Special Report Maint-Month $ 25.0000 $ 25.00
1 , '
EDI Services:
�, Receiving-Advising-Fax
' Receiving-Advising-Fax Maint
International:
' International Wire-Out Non Repeative
Miscellaneous:
CPA Confirmation
Response to RFP #27-05 for the City of Clearwater
26 $ 1.0000
1 $ 10.0000
1 $ 10.0000
1 $ -
Total
$ 26.00 '
$ 10.00 ;
;
$ 10.00 '
, $ _
' $ 10.716.08
Page 13
Response to the Request for Proposal for BankofAmerica ,�
City of Clearwater ���
Response Form - Pricing
PCard Rebate rate to City
Stand-alone Pricing:
Purchase Card
Volume Tiers
Excludes Large Ticket '
$0
$1,000,000
$3,000,000 _
$6,000,000
$9,000,000
$12,000,000
$15,000,000
$20,000,000
40 basis points*
'current State contract
$ -
30 day Cycle
14 days Grace
$999,999 0
$2,999,999 40 '
$5,999,999 ' S0
$8,999,999 60
$11,999, 999 65 '
$14,999,999 70 '
$19,999,999 75
+ , gp
Transactions that qualify for Large Ticket Interchange Qualification
will be eligible for a Large Ticket Rebate based on the following schedule,
provided the Large Ticket Qualified Transactions do not exceed 50% of total
� volume and the Standard Volume qualifies for rebate
i
Large Ticket Volume
Not to Exceed 50%
of total Card volume
$0
$1,500,000
$5,000,000
$20,000,000
$1,499,999
$4,999,999
$19,999,999
+
Response to RFP #27-05 for the City of Clearwater Page 14
•
i
Response to the Request for Proposal for
City of Clearwater
Security Lending Split to City (i.e. 70%) Not Applicable
Estimate Annual Income to City $ -
BankofAmeric �''
�
Response Form - Pricing
Credit Card Processing Fees
Visa Percentage Transaction Fee
Interchange (Retail2: Emerging Market)* 1.43% $0.05
Visa Dues & Assessments 0.09%
Bank of America Fees 0.07% $0.15
MasterCard
Interchange (Public Sector)"
MasterCard Dues & Assessments
Bank of America Fees
1.55%
0.07%
$0.10
$0.15
*- Other Interchange categories may apply. Complete Interchange charts are included
with this response in the "Attachments" section.
Response to RFP #27-05 for the City of Clearwater Page 15
Response to the Request for Proposal for BankofAmeric ���
City of Clearwater �I
Response Form - Pricing
_
City of Clearwater ',
__
List of Investment for Security Lending
04/20/05
NOT APPLICABLE TO B OF A
Issue Due Par Cusip
Desc. Date ' Value Number
Treasury 05/15/05 1,000,000 912827T85
Treasury 05/31/05 4,500,000 9128286B5
__
SLMA 06/15/05 1,000,000 86387SJK7
FFCB 06/17/05 825,000 ' 31331 RWF8
FHLB 07/08/05 1,000,000 ' 31339XV50
FNMA 07/15/05 1,113,000 31359MFV0
' FHLB 07/27/05 1,000,000 3133X6FJ0
' Treasury 07/31/05 2,000,000 9128286E9 ',
', Treasury 07/31/05 1,000,000 912828BE9 '
' FFCB 08/03/05 ', 1,150,000 31331TRT0 ',
FHLB 08/17/05 1,000,000 313389RF7 ,
Treasury ' 08/31/05 1,000,000 9128286J8
• Treasury 08/31/05 2,000,000 912828BJ8
Treasury 08/31/05 1,000,000 912828BJ8
FHLMC 09/15/05 1,000,000 3134A4RA4
Treasury 09/30/05 2,000,000 9128286L3
, FHLB 10/19/05 1,000,000 3133MBNC7
' FFCB 10/19/05 1,000,000 31331T365 I
, FNMA 10/28/05 , 300,000 3136F4PE8 '
' Treasury 11/15/05 1,000,000 9128276N7
Treasury , 11/15/05 1,000,000 9128276N7
Treasury 11/15/05 1,000,000 9128276N7 ',
' FHLMC ', 11/15/05 1,000,000 3134A4UH5 '
I FHLMC '' 11/15/05 2,000,000 3134A4UH5 '
' FHLMC ' 11/15/05 5,000,000 3134A4UH5
' FHLMC 11/17/05 750,000 3128X16Q5
' FNMA 11/17/05 1,000,000 3136F5XK2
FNMA 11/17/05 600,000 3136F5XK2
FHLB 11/18/05 575,000 313389A99
FHLMC 11/25/05 1,000,000 3128X2AV7
', FHLMC 11/28/05 2,000,000 313397PV7
FHLMC 12/30/05 1,000,000 3128X2HN8
' Treasury 12/31/05 1,000,000 912828BU3
FHLB 01/23/06 1,000,000 31339YGB2
, FNMA ' 01/27/06 500,000 3136F4MG6 '
' FFCB ' 01/30/06 1,000,000 31331TRF0
• Treasury 01/31/06 1,500,000 912828BX7 ,
FHLMC 02/14/06 , 1,030,000 3134AOV65
Response to RFP #27-05 for the City of Clearwater Page 16
�
•
Response to the Request for Proposal for
City of Clearwater
__
FNMA 04/13/06 2,100,000 31359MUX9
FNMA 04/19/06 2,000,000 3136F5PY1
FNMA 05/04/06 1,000,000 3136F5SW2
! FHLMC 05/05/06 700,000 3128X3CB7 I
' FHLMC 05/26/06 1,000,000 3128X3HH9 '
I FNMA 06/02/06 1,000,000 31359MVG5 !
! FHLMC 06/09/06 1,000,000 3128X3P72
FNMA ', 06/16/06 2,000,000 3136F5E64
' FNMA ' 06/28/06 1,000,000 31359MVS9
FNMA 06/28/06 ', 1,000,000 31359MVS9
FNMA 06/28/06 '' 2,000,000 31359MVS9
FNMA 06/29/06 ' 1,000,000 3136F4K60
FHLB 06/30/06 620,000 31339YAS1
FNMA 07/12/06 ' 250,000 3136F5W23
FNMA , 07/15/06 650,000 31359YAG2
FNMA 07/24/06 1,000,000 3136F3U53
FNMA ' 07/26/06 1,000,000I3136F52K6
, FNMA 07/28/06 1,000,000 3136F3W93
I Treasury 08/15/06 1,000,000 912828BF6 �',
'�, FNMA 08/25/06 ' 1,000,000 3136F56G1 '
FNMA 09/08/06 ', 1,000,000 3136F4BM5 '
FHLB 10/27/06 ' 1,000,000 3128X1V46
FHLMC 10/12/06 1,500,000
I, 3133MXZP7
' Treasury ' 11 /15/06 ' 1,000,000 ' 9128277F3
FFCB 11/15/06I 1,000,000 31331SFT5
' FHLB 11/28/06 500,000 3133X87K2
' FHLMC 12/04/06 1,000,000 3128X1 GF8 ',
FHLMC 12/04/06 1,000,000 3128X1GF8
FHLB 12/18/06 1,690,000 3128X1KH9
FNMA 12/21/06 2,000,000 31359MWY5 ',
'. FHLB 12/22/06 1,000,000 3133X2PF6 ',
FNMA 12/29/06 500,000 3136F4L93 '
', FNMA ' 12/29/06 500,000 3136F4L93
I FHLMC ', 12/29/06 1,550,000 3128X2HC2 '
', FHLMC 01/05/07 1,620,000 31282KN4
FHLB 01/12/07 500,000 3133X33G6
FHLB 01/12/07 1,150,000 3133X33G6
FNMA 01/19/07 1,000,000 3136F52A8
FNMA 01/19/07 1,000,000 3136F52A8
'', FHLB 01/30/07 1,000,000 31339YKH4
! FHLB 01/30/07 1,500,000 3133X3EH2
�; FHLB , 02/13/07 1,000,000 3133X3JJ3
'�, FHLB ' 02/13/07 1,000,000 3133X3JJ3
FHLB 02/14/07 510,000 3133MYHQ3 '
FHLMC 02/23/07 ,
1,000,000 , 3128X2WN1
FNMA 03/02/07 2,000,000 '
31359MWD1
FHLB 03/22/07 ' 1,000,000 ', 3133X4M73 '
_
Response to RFP #27-05 for the City of Clearwater
BankofAmerica�''
I
Response Form - Pricing
Page 17
�
•
Response to the Request for Proposal for
City of Clearwater
FNMA 03/29/07 1,800,000 3136F6EG0
FHLB ' 04/20/07 1,000,000 3133X1HT7 '
' FNMA 04/23/07 1,000,000 3136F5QK0
FHLB 04/30/07 1,000,000 3133X5Z84 ',
FNMA 05/10/07 500,000 3136F5VY4 '
', FHLMC 05/17/07 1,000,000 3128X3EY5 ',
', FHLMC 05/17/07 1,000,000 3128X3EY5 '
' FHLB 05/18/07 1,000,000 3133X1YN1 ',
FHLB 06/08/07 225,000 3133X4CB5 '
FHLB 06/15/07 ',
1,000,000 3133X2JU0
' 1,000,000 3136F5X89
FNMA 07/06/07
FHLB ' 07/26/07 ' 1,000,000 3133X6A55
! FHLB I 07/30/07 1,360,000 31339YSV5
FHLMC 08/15/07 200,000 3133FOD38
FHLB ', 08/20/07 1,000,000 3133X3MS9
! FNMA ' 08/27/07 1,000,000 3136F6CC1
FHLMC , 08/28/07 ' 1,000,000 3128X3VC4
FNMA 09/21/07 ' 1,000,000 ', 3136F6P52
' FHLB ' 09/24/07 ' 1,000,000 ' 3133X4L41
' FHLB ' 09/28/07 I 1,000,000 3133XB3H6
FHLB ', 09/28/07 ' 1,425,000 ' 3133X4UA7
FNMA 10/01/07 ' 1,155,000 3136F5JW2
' FHLMC 10/18/07 1,000,000 ' 312X3YV9
FHLB ' 10/25/07 1,000,000 3128XODX4
FHLB 10/26/07 1,125,000 3133X8Y30
FHLB 10/30/07 1,000,000 3133X5ZQ4
FNMA 11/09/07 1,000,000 3136F6KM0
, Treasury , 11/15/07 2,000,000 912828AN0 ',
', FNMA 11/16/07 1,000,000 3128X3J46 I
FHLB 11/27/07 725,000 , 3133X9HJ2 ',
', FHLB 12/10/07 1,420,000 3133X2J97 ',
' FHLB 12/28/07 1,000,000 3133X5PN2 '
' FHLB 01/15/08 1,000,000 3133X33Z4 '
TVA 01/15/08 358,000 88059TBS9 '
! FHLMC 01/25/08 1,000,000 3128X32L6
' FHLB 02/15/08 1,000,000 3133XAH83
FHLMC 02/25/08 515,000 3128X2VU6
' FICO 03/07/08 750,000 31771C3W3
', FHLMC 03/24/08 1,000,000 3128X36P3
', FHLMC 03/28/08 1,000,000 3128XOY29
FHLMC 04/04/08 235,000 3128X0363 ',
FHLB 04/08/08 525,000 3128XOY29 '
! FHLMC ' 04/15/08 950,000 3133FOJ34 '
FHLB 04/15/08 750,000 3133MXTZ2
' FHLMC ' 04/17/08 1,000,000 3128X04M8
I FNMA 04/21/08 980,000 3136F5PA3
'' FHLB ' 04/22/08 1,000,000 3133X5PT9 '
Response to RFP #27-05 for the City of Clearwater
BankofAmeric �''
�
Response Form - Pricing
Page 18
�
•
Response to the Request for Proposal for
City of Clearwater
FHLMC 04/23/08 2,000,000 � 3128X06U8
FHLB 05/12/08 1,000,000 ', 3133MYFQ5
' FNMA 05/14/08 1,594,000 ' 3136F3RT5 '
FNMA 05/14/08 1,000,000 3136F3RT5 ,
, Treasury 05/15/08 500,000 912833GC8 '
' FHLMC ' 05/21/08 1,150,000 3128X1DD6 '
' FHLMC 05/27/OS ; 365,000 3128X1 F68 '
FHLB , 05/27/08 ', 1,000,000 3133MYUS4
,_
FNMA , 05/28/08 '' 500,000 ' 3136F3TP1
FHLB 06/30/08 ' 1,000,000 ' 31339XP73
' FHLB '�, 06/30/08 400,000 313239XTQ7
FHLB ' 07/16/08 1,000,000 31339Y4M1
FHLMC 07/22/08 325,000 3128X1TQ0
FHLB 07/25/08 675,000 3133XAG50
, FHLB , 07/30/08 725,000 31339YQF2 ',
I FHLB ' 08/07/08 1,275,000 I 31339YST0 ',
FHLB 08/13/08 1,000,000 ' 31339YV1IN8 I
__
FHLMC 08/13/08 ' 1,000,000 3128X1UZ8
FHLB 08/14/08 1,000,000 31339YWJ7 '
' FHLB ' 08/14/08 1,000,000 ' 31339YVS8 '
FHLB 08/28/08 400,000 3133X07B9 '�
FHLB 10/30/08 710,000 3133X1 L39 ',
, FHLB , 11/21/08 1,000,000 3133MYK30
', FHLMC ', 12/15/08 1,000,000 3128X2DC6
' FHLB ' 12/19/08 1,500,000 31339XBT0 '
' FHLB 12/30/08 1,000,000 3133X2ZM0 '
FHLB 12/30/08 1,000,000 3133X2WE1
FNMA , 02/17/09 1,000,000 31359MUB7
FHLMC ' 02/24/09 275,000 ', 3128X2TZ8
FHLB 03/17/09 400,000 3133X4KK6
, FHLB 03/30/09 1,000,000 3133X4YQ8
' FHLB 03/30/09 1,000,000 3133X5FE3
' FHLB 04/15/09 1,000,000 3133X5WN4 '
FNMA 04/16/09 1,000,000 3136F5PF2 '
FNMA , 04/14/09 600,000 31359MUW1
' FHLMC ' 04/29/09 1,000,000 3128X1V87
' FHLB ' 04/29/09 1,000,000 3133X5UQ9
', FHLB 05/12/09 2,000,000 3133X6HM1
FNMA 05/27/09 1,000,000 3136F5ZZ7 '
FHLMC ', 06/02/09 185,000 3128X3LG6
FHLMC ' 06/02/09 1,000,000 3128X3LG6
FHLB 06/30/09 400,000 , 31339XTD6
' FHLMC 06/30/09 1,000,000 ' 3128X1MZ7 '
', FNMA 07/23/09 425,000 3136F2M709
' FHLB 07/23/09 790,000 , 31339YDB5
FHLB 07/30/09 1,000,000 ' 31339YQH8 ',
' FHLB 08/05/09 1,000,000 31339YT85 ',
Response to RFP #27-05 for the City of Clearwater
BankofAmerica�'�
I
Response Form - Pricing
Page 19
��
�
�
Response to the Request for Proposal for
City of Clearwater
' FNMA
! FNMA
FHLB _
FHLMC
' FNMA
FNMA
FNMA
FHLMC �
' FHLB '
FHLMC ,
FHLB _ __
FNMA
FHLB
' FHLB
FHLMC
FNMA
' HUD
HUD
FHLMC
FHLMC
FNMA
FHLB
FNMA
i FNMA
' FHLMC
FHLB I
FHLB __ ,,
FNMA ,
FHLB
' FHLB
FNMA
, FHLB
� FHLB
� FHLB �
FHLMC
FHLB
FHLB
FHLB
HUD
FHLMC
NA
�'�, FNMA �, -
' FNMA
FNMA
FHLB
Miami
; Beach
08/13/09 ', 800,000 3136F55H0 '
09/18/09 1,000,000 3136F5EJ6
10/29/09 100,000 3133X64Z6
11/Q9/09 1,000,000 , 3128X3G23
11 /09/09 1,000,000 3136F6JQ3
11/17/09 465,000 3136F6KL2 '
11/17/09 1,000,000 3136F6KL2 '
12/07/09 ' 1,000,000 3128X3U68
12/28/09 1,000,000 3133X9Y61
01/12/10 1,000,000 3128X32F9
01/21/10 ' 1,000,000 ', 3133XA5R4
02/08/10 1,000,000 ' 3136F6VU0
02/26/10 1,500,000 3133X3SF1
03/17/10 2,000,000 3133X4ME8
04/14/10 200,000 3128XOR92
04/22/10 1,500,000 3136F3LE4
08/01/10 800,000 911759BL1 '
08/01/10 1,000,000 9117596L1
08/01/11 650,000 , 3134A4HE7
08/01/11 1,000,000 ' 3134A4HE7
09/23/11 250,000 ' 3136F4GW8
11/08/11 1,900,000 3133MYC39
09/10/12 1,000,000 31364FAA9 '
11/19/12 1,000,000 3136F5VS7
01/15/13 1,092,000 3133FOZR3
04/11/13 ',
500,000 3133MXHT9
04/30/13 ' 1,000,000 3133MXXT1
05/13/13 300,000 3128X1AR8 '
06/11/13 600,000 3133MYZV2
07/16/13 500,000 31339ZXZ72
07/17/13 1,000,000 ' 31359MSL8
08/13/13 1,000,000 31339YUK6
08/13/13 1,000,000 31339YUK6
02/27/14 1,000,000 3133X3VP5
04/01/14 1,000,000 3128X2V44
04/15/14 1,000,000 3133X5TM0
04/15/14 700,000 3133X5JA7
04/30/14 860,000 3133X6E68
08/01/14 750,000 911759DD7
08/15/14 1,000,000 3133FOUJ6
12/15/14 1,000,000 88059TBN0
01/14/15 1,000,000 3136F6TG4
03/02/15 1,000,000 31364KJA9
03/26/15 800,000 3136F3GM2
03/30/15 1,000,000 3133XAZB6
09/01/15 1,000,000 5932240BD5
Response to RFP #27-05 for the City of Clearwater
BankofAmeric �'1�
�
Response Form - Pricing
Page 20
C�
.
Response to the Request for Proposal for
City of Clearwater
FHLB 11 /04/15 700,000
FHLMC ' 09/25/17 100,000
FHLMC 02/15/18 ' 270,000
FHLB 06/26/18 ' 1,500,000
FHLB 08/14/18 500,000
FHLB 08/14/18 1,000,000
FHLB 03/09/20 1,000,000
3133MSTK6
3129253F5
3133FOC98
31339XPQ 1
31339YXG2
31339YXG2
3136F6ZW2 '
GNMA Pool 09l20/09 493,407.66 ' 36225DD92
GNMA Pool 09/20/09 496,855.25 3622DBL7 '
, CMO-FNR 36 OL 1,000,000.00
CMO- FHR 2649 QB 1,000,000.00
' CMO- FNMA 2003-8 OP 721,787.62
CMO- FNR 2003-28 A 68,188.80
31393BBQ7 '
31394GJH7
31392HW82 '
31393ADR5
BankofAmeric �''
�
Response Form - Pricing
Response to RFP #27-05 for the City of Clearwater Page 21
•
�
Response to the Request for Proposal for
City of Clearwater
_
City of Clearwater
_
RFP for Banking Services RFP Response Form
Exceptions
' No Exceptions
_
Response to RFP #27-05 for the City of Clearwater
BankofAmeric �''
I
Response Form - Pricing
Page 22
•
.
Response to the Request for Proposal for
City of Clearwater
Bank Contacts
BankotAmeric �''
�
Bank Contacts
As required in Scope of Services Section "O" Designated Bank Contact Personnel, Bank
of America provides the following list of contact personnel within the bank who are
qualified to provide information and assistance to the City in all banking services needs.
Response to RFP #27-05 for the City of Clearwater Page 23
•
•
Response to the Request for Proposal for
City of Clearwater
• GeneralInformation
• Treasury Management consulting and expertise
• Treasury Management product/service and sales
• Issue resolution and escalation
• Accountable for contract compliance
• Sweep Account
• Coin Counting
• Lockbox Services Liaison
BankofAmeric �'�
�
Bank Contacts
Response to RFP #27-05 for the City of Clearwater Page 24
�
.
Response to the Request for Proposal for
City of Clearwater
BankofAmerica�'�'
�
Bank Contacts
Bobbi joined the bank in 1994 and has worked on our Treasury
Management Implementation team and recently joined the
Treasury Management Sales team where she will be the primary
contact for the implementation of services. She has also held the
position of Group Leader in the Research Photocopy Division and
worked in the Incentive Plan Administration and Telephone
Banking Groups.
Treasury Management product implementation and support
• TechnicalIssues
• Treasury Management Implementation
• Treasury Management product/service support
AVP, Sales Support Associate, Government Banking
Bradenton, Florida
lorraine. guay�a�bankofamerica. com
(941) 745-3047
New account opening and support, operations support,
identification of process improvements, & problem resolution
Lorraine is a Sales Support Associate with Government Banking.
She provides expert resolution of client service needs in addition to
those provided daily by the Client Service Center. Lonaine fully
supports the Client and is vital backup to the Client Manager with
all monitoring, troubleshooting and maintenance necessary for
accounts and relationship.
Lonaine has been in the Banking and Finance industry for over 29
years. Her responsibilities are widespread but include assisting in
the mazketin� of client needs and overall relationship satisfaction.
Response to RFP #27-05 for the City of Clearwater
Page 25
�
i
Response to the Request for Proposal for
City of Clearwater
BankofAmeric �''
�
Bank Contacts
Market Treasury Management Southeast region. This includes
providing technology consulting and solutions that integrate data
to ERP systems and Treasury Workstations, internal and external
technology seminars and e-Commerce solutions.
Cindy Hammer attended Purdue University and Wichita State
University where she majored in Computer Science. She is active
in volunteer work within the local elementary school as well as
being a Junior Achievement volunteer.
Cindy is responsible for being a technical advisor to meet the
payment, receipts, and treasury needs of Florida Government
clients.
(800) 325-4296
Day-to-day operational support to the City will be provided by
your dedicated representative at the Client Service Center,
which is available from 8:00 a.m. - 5:00 p.m. EST, Monday
through Friday, excluding bank holidays.
The Client Service Center is available to assist with account
information, research items, account errors/corrections and
general account maintenance. This group is measured on their
professionalism, accuracy and turn around time in resolving
issues. The center has Group Leaders available to the City for
additional assistance if issues need to be escalated.
Response to RFP #27-05 for the City of Clearwater
Page 26
�
�J
Response to the Request for Proposal for
City of Clearwater
Scope of Banking Services
BankofAmeric �'��
�
Scope of Banking Services
The City of Clearwater is currently looking for a financial institution to provide the
following banking services.
A. Main Operating Account:
The City's main operating account covers a variety of activities. Several of the City's
departments are responsible for their own deposits, and require a 24-hour deposit
capability for their collections. Deposits will be made by either city employees or a
security service. Upon verification of the deposit and a copy of the deposit slip an
acknowledged must be made by the bank and transmitted to the city for verification.
Should deposited checks be returned because of insufficient funds (or any other reason),
at least one attempt will be made by the bank to redeposit the check, after which it will be
forwarded to the City's Finance Department for processing.
The City's banking account details are included on the Bid Response Form.
The average amount of money processed through this account each month is
$28,000,000. Of this amount, approximately'/z involves investment transactions.
The bank must have the capability of receiving electronic transfers and wire transfers
from the state, federal, and local governments for items such as state revenue sharing,
federal grants, and community development block grants.
The average monthly value of this account (including cash and short-term inveshnents)
over the past 12 months has been approximately $15,000,000.
Response:
Bank of America will continue to provide the City's Main Operating Account with all of
the above mentioned requirements. Your local Client Team, including Vicki Parker and
your Treasury Management Sales Officer, Maria Roman-Joyiens, will continue to meet
with you far regularly treasury reviews in order to assure that the services required for
this account are in place and working to the City's satisfaction. Our Client Team also
includes Neil Keen, of our Client Investment Strategies group who will continue to work
with you to provide the best possible short term investment solutions. As you are aware,
Bank of America has the capability of receiving electronic transfers and wire transfers
from state, federal and local governments for all funds that are due to the City.
Response to RFP #27-05 for the Ciry of Clearwater
Page 27
Response to the Request for Proposal for
City of Clearwater
B. Payroll Account:
BankofAmerica�'��
�
Scope of Banking Services
The City is on a biweekly payroll basis, paying an average of 2,000 employees every
other Friday. The net payroll amounts to approximately $2,200,000 per pay period. In
addition, a pension payroll of approximately 70 checks is issued at the end of each
month. Net pay for this pension payroll amounts to approximately $1,200,000.
The City will not deposit funds to the payroll account. Instead, the bank will operate a
"zero balance account," to which funds are automatically transferred from the main
operating account as payroll checks are presented to the bank for payment.
The City currently offers a voluntary direct deposit payroll system to its employees. The
Bank must have the capability of processing this "direct deposit payroll" whether the
employees' accounts are at the bank or at other banking institutions.
Response:
Bank of America will continue to provide the City's Payroll Account with all of the
above mentioned requirements. We will also continue the "zero balance account" service
to automatically fund the payroll account from the main operating account.
As Bank of America is currently the provider of direct deposit services to the City, we
will continue to work with the City to encourage more employees to participate in the
• direct deposit service and to offer other payroll solutions for the City to consider.
Provided on the next page is the City's current account structure with Bank of America.
�
Response to RFP #27-05 for the City of Clearwater Page 28
�
�.
•
Response to the Request for Proposal for
City of Clearwater
City of Clearwater
Proposed Account Structure
City of Clearwater
Consolidated Cash Account
001260030758
I
Funded by ZBA
1
City of Clearwater
Payroll Account
001260030766
• ZBA Sub
• ACH — Consumer Credits
• Full Reconciliation
• Positive Pay
• CD ROM (Participant)
• Bank of America Direct
• Previous Day Balance, Detail
• Current Day Balance, Detail
• Stop Payments, Inquiry
• Positive Pay
• Image Access
C�
Response to RFP #27-05 for the City of Clearwater
BankofAmerica�'�
�
Scope of Banking Services
• Public Funds Interest Checking (PFIC FFE - 0 BPs)
• ZBA Master
• Return Item Reclear
• ACH — Consumer Debits
- Corp Debits ( HTTPS)
• Cash Deposits
• Vault Services (Fed Ready bags 100/week)
• Banking Center, Night Deposit
• Vault Change Orders
• Full Reconciliation w/output transmission
• Positive Pay
• CD ROM (Master)
• Retail Lockbox (Regulus)
• EDI Advising Fax
• Bank of America Direct
• Previous Day Summary, Detail
• Current Day Summary, Detail
• Stop Payments, Inquiry
• Wire Transfers
• Electronic Return Item Notification (ERIN)
• Positive Pay
Clearwater Fire
Explorers Fire &
EMS
002455210696
(Business Economy Ckg)
City of Clearwater
d/b/a The Harborview Center
001263620748
(Business Economy Ckg)
Page 29
s
.
Response to the Request for Proposal for
City of Clearwater
C. Bank Statements:
BankofAmeric �''
�
Scope of Banking Services
The cut-off date for statement purposes for all City accounts will be the last day of each
month. Statements must be received by the City's Finance Department within five
working days following the cutoff.
Payroll checks are computer generated. The depository bank must have computer
capability to reconcile checks issued by the City with checks paid by the bank, using
magnetic tapes supplied by the City and bank computer files of checks paid.
Although payable checks drawn on the City's main operating account are computer
generated, the computer system does not currently contain a reconciliation module. When
a system is purchased that contains a reconciliation mode the bank will be required to
reconcile paid checks in the same manner as for the payroll account.
Checks are to be arranged in numeric order prior to their return to the City with the
statements.
A statement must be furnished for all special accounts required by the City on the same
schedule as required for the operating account. The City reserves the right to add
additional accounts as necessary.
In addition to regular statements, the bank must provide on demand, daily balances in the
depository accounts if and when such information is required by the City.
Response:
Bank of America will continue to provide the City with bank statements for all accounts
within five working days of the month-end cutoff date. This will also include all special
accounts as needed by the City. Any new accounts needed by the City will be available
upon request.
In addition, the Bank will continue to provide automated reconciliation services along
with computer files back to the City of checks cleared by the Bank. In lieu of providing
checks sorted back to the City, the Bank will continue to provide CD Rom images of the
checks.
D. Coin Deposits:
City parking meters generate collections of coins in, 5 cents, 10 cents, 25 cents and $1
denominations, ranging from approximately $1,000 to $15,000 per day. The coins are
collected by City Employees, packaged and prepared for armored vehicle delivery to the
location and/or individual specifically designated by the bank. The City will count the
coins and prepare as many Fed ready bags as possible. The bank must provide adequate
internal security to guarantee proper handling of such deposits. The bank will be
expected to provide such mechanical sorting and/or counting equipment that may be
required.
Response to RFP #27-05 for the City of Clearwater
Page 30
�
u
Response to the Request for Proposal for
City of Clearwater
BankofAmerica�'��
�
Scope of Banking Services
In addition to depositing coins the City will require the bank to provide wrapped coins to
be used as change for the parking meter change machines. The City estimates a
significant amount (over $20,000) of dollar coins will be needed in the springtime to
meet this spring break change needs.
Foreign coins, tokens, slugs, mutilated coins, etc., will not be counted or assigned a value
but will be removed from deposits, accumulated, and turned over to the City's Finance
Department weekly. Details of this procedure will be worked out between the City's
Finance Department and the bank.
Coin deposits must be counted and documented during the business day received, or the
following day if collection is received after the cut-off time established by the bank. All
deposit slips will be delivered to the City's Finance Department at the Municipal
Services Building no later than the next working day following the deposit.
Response:
Bank of America will continue providing the City with the full range of coin deposit
procedures as described above via our Banking Center and Cash Vault facilities. This
process has been successful for many years for both the City and the Bank and will
hopefully continue for many years to come.
E. Lock Box Services:
The bank will provide a lock box service for the City's utility collections, according to
the following instructions:
1. The City will provide a post offce box. The bank will retain a key to this post office
box and have exclusive use of same. The bank must provide the internal security needed
to guarantee proper handling of all deposits received through the post office box.
Response:
Regulus will continue to pick up the mail from the City of Clearwater's PO box which is
located at the Tampa Post Office.
2. Each morning, the bank's personnel will empty this box of its contents, at an early
enough hour to insure that all deposits will be processed prior to cutoff. The contents of
the envelopes will be removed, and checks or cash will be verified against the utility
payment stub.
Response:
Currently, Regulus picks up the City of Clearwater's mail according to the following
schedule at the Caller Box Division of the Tampa Post Office. Regulus will continue
with this same schedule.
Response to RFP #27-05 for the City of Clearwater
Page 31
Response to the Request for Proposal for
City of Clearwater
BankofAmeric �''
�
Scope of Banking Services
Site Weekda s Saturda s Sunda s Holida s
Tampa AM: 3:30, 6:30, AM:4:00 AM:6:00 Client
9:00,12:00 dependent
PM: 4:00, 10:30, PM: 12:00 PM: 12:00
12:00
3. All items will be processed by OCR scan, balanced, and filmed, and the aggregate
amount deposited the same day to the operating account. Deposit information will be
transmitted electronically, via modem to the City's Utility Customer Service Division by
11:30am of the same day. The modem transfer must be compatible to the City's
computer system.
Response:
Regulus will continue to process the City's lockbox item as it is today unless the City
advises that changes are needed. Regulus will be glad to work with the City to provide
solutions for any issues that come up.
In addition, Regulus images all of the City of Clearwater's transactions that are processed
through its system. These images can be accessed by the City through Regulus' iVault
� online imaging archive service. We have provided more information about the imaging
archive service in the "Attachments" section.
4. The utility stubs, one copy of the deposit slip, any items that cannot be processed, and
a report containing all items processed in step (3) will be delivered to the Ciry's Utility
Customer Services Division at 100 South Myrtle Avenue, prior to 3:00 p.m. on the same
day that they were received. The magnetic tape must be compatible to the City's
computer system.
Responseo
The above information is currently returned to the City's location on a daily basis.
5. A copy of the same deposit slip will be delivered to the City's Finance Departrnent at
Municipal Services Building on the same day that they were received.
Response:
The deposit slip will continue to be included in the daily outbound package that is
delivered to the City's Finance Department.
6. Subcontracting of lock box processing requires the City's prior approval.
Response:
Regulus is the current lockbox subcontractor for the City that was recommended by Bank
of America. We recommend that recommend that the City continue to use the services
• provided by Regulus. Bank of America will work with the City if any further approvals
are needed.
Response to RFP #27-05 for the City of Clearwater Page 32
Response to the Request for Proposal for
City of Clearwater
BankofAmeric �'�
�
Scope of Banking Services
7. Indicate accuracy standards and what penalties the financial institution will incur
these standards are not met.
Response:
Regulus' quality measurement categories are closely aligned with those developed by the BAI
and include item processing errors, procedural errors, deposit errors, packaging/distribution
errors, deposit report errors, late/failed deposit report errors, detail report errors and late/failed
detail report errors. Regulus also is willing to negotiate other types of error monitoring at the
City's request.
F. Investments:
The bank will handle the purchase or liquidation of investments only upon written
instruction by the City's Finance Director or her designee.
Investment transactions must be consummated on the same day that instructions indicate.
Failure to consummate investments on a timely basis will constitute a breach of this
contract and will constitute cause for immediate cancellation of the contract, or legal
action for damages, or both.
Upon maturity or liquidation of an investment, written notifcation will be sent to the
� City's Finance Director showing the deposit of the proceeds. The same type of written
notification will be required for all purchases of investments handled through the bank,
whether purchased by check, wire transfer, electronic debit, etc. These notifications will
be mailed on the same day that the transactions occur.
�
The City reserves the right to invest in time deposits of any bank, U.S. Government
securities, repurchase agreements, or other investments deemed legal and prudent in the
opinion of the City. In no case will the bank be awarded time deposits at rates lower than
those established in the competitive marketplace.
The bank shall provide safekeeping facilities for investments owned by the City, either
within the bank's own facilities, or at the Federal Reserve. A copy of all safekeeping
receipts will be issued to the City at the consummation of each investment transaction. A
statement listing the details of all items in safekeeping will be furnished to the City at the
end of each month.
The City may separate the custody of investments away from the baking contract.
Response:
Bank of America will continue to provide Safekeeping services for the City.
We will continue to provide Money Market Funds, Securities, US Government Agency
Issues and any other securities as desired by the City. We continue to offer these services
to the City as we strive to work within your investment policy to maximize yield. As
markets continually change, Client Investment Strategies will work to bring fresh ideas
and investment alternatives appropriate far the City.
Response to RFP #27-05 for the City of Clearwater
Page 33
Response to the Request for Proposal for
City of Clearwater
G. Securities Lending:
BankofAmeric �''
�
Scope of Banking Services
The bank will lend securities the city owns. Revenue will be posted monthly to the city's
account. The city may separate custodial and Securities Lending from the rest of the
banking contract if in the City's opinion it is justified.
Response:
Bank of America does not offer Trust/Custody services, and therefore would not be able
to provide Securities Lending to the City at this time.
H. Public Depository - Collateral:
In compliance with the Florida Security for Public Deposit Act, Chapter 280, Florida
Statutes, all institutions submitting bids for the City's banking service must be included
on the list of approved financial institutions as published by the Department of Insurance
and Treasurer of the State of Florida.
Response:
Bank of America, as the City's current provider of banking services, is in compliance
with the Florida Security for Public Deposit Act, Chapter 280, Florida Statutes. We have
� provided a copy of Bank of America's Certificate of Qualified Public Depository signed
by the Treasurer, State of Florida in 1999 in the "Attachment Section".
I. Web Based Bank:
It is the City's intention to take advantage of internet based bank and all of the advantage
it offers. The proposing bidder should offer as many services as possible via a web site.
Response:
Bank of America recommends Bank of America Direct Information Reporting to the City
of Clearwater. Below is a detailed description of the capabilities and functionality of
Bank of America Direct. Its robust features and focus on efficient electronic commerce
will further enhance the City's working capital and streamline its business processes.
Bank of America Direct
Bank of America Direct, our premier, integrated suite of treasury management services,
is designed to support the requirements of clients like the City of Clearwater. Bank of
America Direct can make it easy for the City to manage all of its banking and financial
activity.
Bank of America Direct offers inquiry capabilities and transaction—based services such as
Positive Pay, Stop Pay, ACH, and Wire Transfer payments. Expanded transaction search
• capabilities are available far inquiry against Previous and Current Day information
reporting. Wide ranges of standard pre-formatted reports are available to assist the City
Response to RFP #27-05 for the City of Clearwater Page 34
�
�
Response to the Request for Proposal for
City of Clearwater
BankofAmeric �''
�
Scope of Banking Services
with its daily cash position needs. Reports can include balance and/or just summaries,
transactions only, or a combination of balance, summary, and detail transaction
information.
Because Bank of America Direct is accessible via any personal computer with Internet
access, the City would not be required to install any special software or programs. Bank
of America Direct provides:
The highest level of security available in the current market:
• Easy access via existing Web-browser technology
• Familiar Internet screens to eliminate hours of training and fumbling through
cumbersome, thick operating reference manuals
• Efficient Internet access including viewing bank information from multiple,
remote geographic locations without purchasing extra software or delivery
systems from a bank
• Eliminates the up-front investment made to install, maintain, and train
employees on using bank software
• Provides automatic upgrades and enhancements without downloading or
installing new versions of bank software
• Minimizes hard disk space to store software, indexes, or images; therefore
creating a more efficient system
By making the information available over the Internet via Bank of America Direct, the
City will have control of user accessibility at the account level and may share information
across departments. Users will have the ability to view standard reports, customize by
dates and accounts with one time reports, schedule previous day reports that the City
needs everyday, and export report data in a comma-delimited format for use in other
applications.
Bank of America Direct Structure
Bank of America Direct is comprised of three primary modules:
Treasury Direct — The City can access iinancial data, summary and detail,
quickly and then share the information with other areas of the organization so that
everyone can make the best business decisions possible. Customizable reports are
available in a variety of formats to accommodate the City's needs and deliverable
within seconds. Reports can be viewed on screen, printed, and exported into
financial spreadsheets.
Payments Direct — The City can make payments, monitor the status of checks,
handle exceptions, and reconcile payment activity in the simplest and fastest
manner possible. Using this module of Bank of America Direct, the City will be
able to initiate wire and ACH payments, view clear images immediately of its
Response to RFP #27-05 for the City of Clearwater
Page 35
•
•
Response to the Request for Proposal for
City of Clearwater
BankofAmeric �'��
�
Scope of Banking Services
paid items and exceptions, make positive pay and stop pay decisions, and
reconcile its accounts.
Receipts Direct — Receipts Direct integrates receipts information and images,
and, will allow the City to view images of lockbox checks, remittance documents,
and correspondence.
Bank of America Direct was designed to be user-friendly and simple to navigate to the
various modules and options. Our clients include over 6,500 government entities and
over half, or 9,000, of our corporate clients on Bank of America Direct. Consistently our
clients have provided us with positive feedback on the quality and the ease of use of this
treasury channel. The City of Clearwater can expect the same experience.
BankofAmerica.�9'j
Bank of America Direct
PaymeMs Direct
Seroices � Notifications [2 pending}
Payments Direct is your source for payments information and
transaction initiation, Services currently a�ailable are Positive
Pay, Reconciliation, Stop Pay, ACH Initiation, Payments
Initiation, and FX Wires and Draks.
Dir�t
Receipts Dired is your source bo access all transadions and
infvrmation related to your incoming receipts, The services
currently available are Receipts On-Line and Lock6ox Image
Access.
Treasury Direct
Services � Notifications (0 pendinq)
Treasury Direct is your source for summary and detail
information regardinq your accounts at Bank of America as
well as other U.S. finanaal institutians. Services curcently
available to assist you in cash position management ere
Pre�ious and Current Day Information Reparting, Online
Statements and Reports, Global Information Raporting,
Transaction Search, Account Transfers, and Continuous
Linked Settlement (CLSrm�
L060FF�
Tools � Admin � Log � Nelp
aueeeuTUl VenWm, ne.
f+�t aolaen
0�?3�2004 �3:04 COT
Trade Direct
Senrices
Trade Direct is your source for the initiation and information
reporting associated with commercial and standby letters of
credit, export letter of credit advising, examination, and
transfers, as well as documentary collections, Services also
include trade payments and transaction tracking.
trnages
Services
Images is your source to access images of all paper debits,
credits, deposited items and returned items. The services
currently available are Image Access Inquiry and Download
Direct Offline Payments Viewer,
Administration
Services � Notifcations (0 pending)
Administration is qour source for setting up a user, as well as
for editing, deleting, and maintaining user information and
account privileges.
Tools
Services
The services currently available are E-mail Delivery Status
and User Displar Options.
COnitnfSprOpbtyo/8an4ofAmC�KO. All�igh(S�CSc`rvt0,
Main menu of Bank of America Direct
Information Reporting
Through Bank of America Direct, the City will have access to its information reporting in
the form of Previous Day and Current Day information reports.
Previous Day information is available to the City as early as 7:00 a.m. ET, Monday
through Friday. For Current Day reporting via machine-to-machine data transmission,
Response to RFP #27-05 for the City of Clearwater
Page 36
•
•
Response to the Request for Proposal for
City of Clearwater
Bank ofAmerica �''
�
Scope of Banking Services
files will be created Monday through Friday on a predefined schedule with updates
occurring every half hour, starting from 8:00 a.m. ET through 3:00 p.m. ET, followed by
hourly updates unti19:00 p.m. ET.
I BankofAmerica.�
Treasury Direct Ser�ices
• Access Online Statements and Reports
• Access Global Information Reportinq
. Access Continuous Linked Settlement[CLS)
Account Services: I None Selected
Account Transfers: I None Seleded
Information Reporting: � None Selected
Go
Standard Reports
Day Type: Previous Day
Report: (none seieded)
Format Option: None Selected
Set Format Option Default
Delivery Option: View Now
Go
Con[entr proFeKy of 8snk of Ame�ici.
LOGOfF�
Tools � Admin � log � Nelp
Successiul VeMures, Inc.
Pffi Golden
OS�Ofi/200+J 92:53 CDT
Access to online Current Day and Previous Day Information reports
The City may customize the information it receives for both Previous and Current Day
reports. Authorized users from the City may specify criteria based upon transaction
types, BAI codes, transaction amounts, specific text information or reference numbers.
Up to 15 current and 15 previous day reports can be customized per user. All reports
may be generated in any of the following formats: PDF, HTML, Excel, comma delimited
(CSV), BAI2, BAI2A, or text. All customization selections can be saved as templates,
which can then be exported or scheduled on a recurring basis.
Reports available to the City for both Current Day and Previous Day reporting, unless
otherwise indicated, are as follows:
• Balance Report (Previous Day) — displays previous day ledger balance,
opening ledger balance, closing ledger balance, average closing ledger
balance M-T-D, opening available balance, collected balance, average
Response to RFP #27-05 for the City of Clearwater
Page 37
`' Response to the Request for Proposal for
City of Clearwater
�
�J
BankofAmeric �'�
�
Scope of Banking Services
collected balance M-T-D, 1-day float, 2+-day float, total credits and total
debits
• Balance Report (Current Day) — displays current ledger balance, opening
available balance, current available balance, 1 day float, 2+ day float, total
credits and total debits
• Summary Report — includes all balances and summaries for the City's entitled
accounts
• Detail Report — displays the break out of the previous day's activity by credit
and debit rype. For each credit and debit type, information includes the
amount, customer reference number, bank reference number, immediate
availability, 1 day float, and 2+ day float
• Detail with Text Report — contains the same information as the Detail Report,
plus additional text regarding transactions such as wire transfers
• Summary and Detail Report — combines the Summary and Detail Reports for
each of the City's entitled accounts
• Summary and Detail with Text Report — combines the Summary and Detail
with Text Reports for each of the City's entitled accounts
• ACH Report — same as the Detail with Text Report but contains only
Automated Clearing House transactions
• Deposit Report — same as the Detail with Text Report but contains only
commercial deposits and lockbox transactions
• Non-Post Report — same as the Detail with Text Report but contains only non-
posted transactions
• Item Report — same as the Detail with Text Report but contains only returned
items
• Wire Report — same as the Detail with Text Report but contains only wire
transfer transactions
In summation, the following reports are available for Current Day and Previous Day
reports.
ACH Report
Balance Report
Controlled Disbursement Detail Report
Deposit Report
Detail Report
Response to RFP #27-05 for the City of Clearwater
X
X
►�
X
X
X
X
X
X
X
Page 38
�
•
Response to the Request for Proposal for
City of Clearwater
BankofAmeric �''
�
Scope of Banking Services
Detail with Text Report X X '
Electronic Return Item Report X ;
Lockbox Deposit Report X X ,
Non-Post Report ' X X
, Returned Items Report X X
Summary and Detail Report X X
Summary and Detail Report with Text X X
Summary Report X X
Sweep Detail Report X X
Sweep Summary and Detail Report X X
Wire Report X X ,
Online Statements and Reports
Bank of America Treasury Direct Online Bank Statements and Reports is one of the
newest service enhancements we have developed to better assist our clients with their
working capital management. Benefits of this service include:
Timely access to a range of reports accessed through Bank of America Direct or
automatically sent via email to the City. Most reports will be available the following
business day after the City's cutoff date
• Improved information sharing among associates. The City can schedule these
reports to be delivered to a single or multiple associates as soon as they
become available, rather than logging on through Bank of America Direct to
view, download, and send the reports.
• Ability to search across multiple accounts using flexible search options and
customize reports
Client using this service experience greater convenience and flexibility. Treasury Direct
Online Statements and Reports provide many standard options to give the City a
complete picture of its accounts. Depending upon the Ciry's account setup, the following
statements are available:
• DDA statements
• ACH reports
• Sweep statements
• Account Reconcilement reports
• Account Analysis statements
Response to RFP #27-05 for the City of Clearwater
Page 39
�
.
Response to the Request for Proposal for
City of Clearwater
an�rica Direct"
UNL7Nr STA"iEMErvrS aNO REP8RT5 ,�;?5j,�a.
�nllne Statements and Reports
Schedule Email Deliverv
Search Online Recon Reports
StatemenURepoN Type: (none selected�
Accoun� (none selected)
Date: (none selede� �
Format Optioru: HTML �
Delivery Options: View Now �
Go
BankofAmeri �'��
�
Scope of Banking Services
BankofAme�ica.�'j
L Fxit Onfine �atemeMs and Reports �
Contents praperty ofBankofFlmerici. AlirigAts rese�ved. Online Priracv Policv
SV�33FV� Vel�l.�eg, NC.
Pat 6Wden
oa�or�2a�a 12:os cor
Screen capture that highlights the variety of options City of Clearwater will have in
accessing its information through Online Statements and Reports
Additionally, DDA and Account Analysis statements will be available for up to six
cycles of infortnation to the City. If the City elects to use this service, it can access its
reports online the next business day via Bank of America Direct, once the reconciliation
of the City's accounts is complete. Reports viewed online will contain the same
information available in the paper reports.
With the online search tool, the City can search across multiple accounts and reports far a
specifc transaction, by keying in specific criteria. Additionally, the City can create
customized reports to fit its unique business needs. This customized information can be
viewed online or downloaded for further analysis. Most other banks do not provide their
clients the abiliry to search for specific transactions across multiple accounts and reports.
At Bank of America, we seek ways of making business simpler and allowing our clients
to do banking as they have never done before.
Using the Online Statements and Reports feature, the City can reconcile accounts without
having to wait for the printed statements to arrive in the mail. Statements can be viewed,
printed, or exported in Adobe Acrobat� PDF, HTML, or TXT formats. Bank statements
are available the next calendar day after the generated cutoff date. Statements for partial
account reconciliation are available the fifth business day and full account reconciliation
are available the seventh business day, provided that Bank of America has received a
correct issue file for full account reconciliation (full reconciliation account statements are
not released until the account(s) have been balanced). Analysis statements are available
the fifth business day of the billing month. At this time, entities on account analysis will
still receive paper statements mailed to them. Once historical information is available the
Response to RFP #27-05 for the City of Clearwater
Page 40
�
s
Response to the Request for Proposal for
City of Clearwater
BankofAmeric �''
I
Scope of Banking Services
City can access six cycles for bank and account analysis statements. The City can elect
to store six or 24 statement cycles for account reconciliation.
We have provided samples of the Bank of America Direct Reports in the "Attachment"
section.
To access a demonstration of the features and capabilities available on Bank of America
Direct, please visit the following Website to experience the maneuverability of our online
banking services.
Website: http://corp.bankofamerica.com/direcddemo
As a safeguard to our demo service, the password is changed on the first business day of
the week at 7:00 a.m. ET. Please contact your Treasury Management Sales Officer,
Maria Roman-Joyiens, to receive the most current passcodes for access to the demo.
� s �
� - ' ' ° . BaekofA�nerica�
Bank ofAmerica Direct° �
5[art The Demo
-- -�
CI Screen This demo Is EestvieweA a[ a screen resolu[ion o18W xBm or�ig�er.
� Resolutlon
f� 7 Oigital The Eigftal oaRiSmta presentrnentD�ooese shown in Mfa demo is a represenfation W the
L� CertiHcatec aotual prooess, Gut Is notlive. You DO NOT neetl a Aigital oeNllcate Oo Newthe Gemo.
I�1 Adoba InorAertoviewlnfom�atlonRepor�,youwillneeCOOhavetheAtloDaACrobatplug-inor
L� 1 qorobst halpor insfaOeA on V�IS maoAine.lf you doNtknowit you havctlds propiam installed. Click
�ere io fest. If you see a repoR epDear, ynu �ave Awobat. Ityou Eo not, you WII neeE to
dowNoadtAo }ioo plug-in from MoE� Dy dickino here.
i-1 UnatlwWod FIasA PIa7l�r8D orlJpher is raQuiieE ao roiewthe Una!lended F�7e Delhrery 7utonal. To
��� Flle Dell�,ery OonNOatl ilas� Plar�� trom Maorortr�a d k he�e.
c 1 DowMOatlMe Cli k hew to dowNoad (��78 Mb)1h� sotl-�xtraAng .axo rla of Mie demo. When prompted
�� Mmotoytwr sp�oifyfieAriveanAAirecloryu�herethesoRmaresAouldbesaved.TAen,findl�e
co�a� +�w.x.rtm� a.:, na w�,uon yo� spaaree .�e exea,m tn� nie.
Screen print of Bank of America Direct's Demo Service
Response to RFP #27-05 for the City of Clearwater
Page 41
Response to the Request for Proposal for
City of Clearwater
J. Overnight Repurchase Agreement Sweep Account:
BankofAmeric �''
�
Scope of Banking Services
At the close of each business day, all collected balances in City accounts will be
transferred to a special investment account, called a sweep account. They City is open to
the type of account uses by the account must be full backed by government, agency, or
AAA rates securities.
All interest earnings will be computed in accordance with the negotiated rate that was
agreed to in the contract for banking services. This negotiated rate shall be stated by
prospective bidders as a rate that bears a direct relationship to the "average daily Fed
Funds rate," as published in the Wall Street Journal. The rate bid by the bank will be
quoted in decimal points, such as "the average daily Fed Funds rate, minus .10" (or 10
"basis points"), "the average daily Fed Funds rate, p1us.10 etc. In no case will the City
accept another source for computation of the interest rate.
Response:
Currently the City's Main Operating Account is setup as a Public Funds Interest
Checking Account (PFIC) as described below.
Public Funds Interest Checking
In today's current rate environment, a Public Funds Interest Checking Account is the
� most advantageous and cost effective investment option, which provides the necessary
collateralization and is utilized by most government entities.
•
Interest Rates
Bank of America will pay to the City a base rate of Effective Fed Funds minus 0 basis
points. (Source: Federal Reserve Bank Report and news services such as Telerate) on all
Public Funds Interest Checking Accounts. The base rate for interest bearing accounts
will be the weekly average of the daily opening Federal Funds Rate as quoted by Garvin-
Guy Butler (source: news services such as Telerate and Reuters). Thursday will be
considered the first day of the week for calculating the weekly average opening rate and
for interest rate adjustments. In the event that Thursday is a bank holiday, the rate will be
adjusted on Friday. With a PFIC, interest is accrued daily based on the collected balance
and an actual day year (365-day year except Leap Year, which would be 366 day year).
Interest is compounded on each individual interest bearing account and is credited on the
last business day of the month. Bank of America collateralizes the Public Funds Interest
Checking in accordance with the Florida Security for Public Deposits Act. With the
Public Funds Interest Checking Account, interest is calculated using 100% of the
collected balance. No reserve requirement is required on this account.
There are no restrictions on the frequency or types of withdrawals from the Public Funds
Interest Checking Account. This account is widely used by Bank of America government
clients due to the "hassle free" simplicity. Through Bank of America Direct, account
transfers can quickly be processed when movement of funds is required and all account
balances will be available on current and previous day reports.
Response to RFP #27-05 for the City of Clearwater
Page 42
��
.
Response to the Request for Proposal for
City of Clearwater
K. Disasters:
BankofAmeric �''
I
Scope of Banking Services
In the event of a disaster or national emergency such as a hurricane, flood, and civil
unrest the fmancial institution will have available with 24 hours notice $50,000 in cash
for the City. The cash will be at a site mutually agreeable by both parties. In the event of
a major disaster such as a hurricane, the financial institution will have a facility open in
the Clearwater area for the City's use within 72 hours after the event is over. This
facility will also be used for City employee's to cash payroll checks in addition to other
City business. The City recognized that it might have to make special accommodations
such as security and a location for this to occur. The financial institution will include
provision of the City of Clearwater in its disaster plan. Final details will be negotiated
with the successful financial institution.
Response:
Bank of America will be happy to provide emergency financial services to the City as we
have done in the past. We can provide $50,000 in cash with 24 hours notice from our
cash vault. We can negotiate the details of offering a facility for employees to cash
checks and other needed services.
L. ACH Services:
The financial institution needs to provide ACH payment applications for utility
payments. Rejects need to be transmitted daily to the City's Utility Customer Service
Division. Item deletion/reversal need to be available.
Response:
Bank of America currently provides the City ACH payment applications for utility
payments. The bank will continue to support all of the current services and will work
with the City to provide solutions for future ACH payment needs that the City will want
to pursue.
M. Deposits by Armored Car Service:
The City uses armored car services for deposits from the City's Utility Customer Service
Division located at 100 South Myrtle Avenue. Deposits are picked up daily by 1:OOpm.
These deposits need to be delivered to a local financial office for same day credit.
Provide location and the time the deposits need to be received for same day credit.
Response:
Bank of America's Tampa Cash Vault, located at 4109 Gandy Blvd., Tampa, FL 33611,
is currently servicing the City's deposits from the City's Utility Customer Service
Division. These deposits are delivered by the City's armored car service to the Tampa
Cash Vault by the 2:00 cutoff time and are given same day credit.
Response to RFP #27-05 for the City of Clearwater
Page 43
Response to the Request for Proposal for
City of Clearwater
N. Payment for Services:
BankofAmeric �''
�
Scope of Banking Services
All account charges will be itemized on a monthly basis and remitted to the City's
Finance Department. Following the City's opportunity to review the statement of
charges the City will remit a check to the bank.
Response:
Bank of America will continue to provide the City with a monthly account analysis
statement addressed to the City's Finance Department. This analysis statement will serve
as the invoice which can be paid by check after review by the City.
0. Designated Bank Contact Personnel:
The bank shall provide a list of contact personnel within the bank who are qualified to
provide information and assistance in the following areas on a daily basis. Include
position, length of service, and summary of professional experience. Please attach listing
to bid response form.
1. GeneralInformation
2. Investments and Safekeeping
� 3. Lock Box Services
4. Bookkeeping
•
5. Sweep Account
6. Coin Counting
7. Disaster Contact
Response:
(24 hours per day, 7 days per week)
Bank of America has provided a list of the contact personnel within the bank who are
qualified to provide information and assistance to the City in the areas listed above. The
listing is attached to the bid response form as requested.
P. References:
In order to ensure that the bank awarded the contract for the City's banking services is
capable of handling the City's accounts, the bank must provide a list of names and
addresses of business customers of similar size and complexity to the City's
organizational requirements. Municipal client references are preferable. In addition,
each bank must provide a copy of its most recent audited financial statement.
Response:
Bank of America is pleased to provide the following current clients, for which the bank
provides identical or similar banking services, as references that the City of Clearwater
may contact:
Response to RFP #27-05 for the City of Clearwater
Page 44
s
•
Response to the Request for Proposal for BankofAmerica���
City of Clearwater �I
Scope of Banking Services
Andy Jacobsen 301 4`� Street SW
Largo, FL 33779
Earl "Sandy"
Sanders
Jeff Spies
' 750 Milwaukee Ave
Dunedin, FL 34698
1 4ths Street N
St. Petersburg, FL
33701
727.586.6173 iacobsena(a�,pinellas.kl2.fl.us
727.298.3029 ssanders(a�dunedinfl.net
727.892-5113 j�spies(�a,stnete.org
Bank of America's 2004 Annual Report is provided in the "Attachment" section.
Q. Written Contract:
The City will enter into a signed contractual agreement with the bank selected for a
period of five years. This contract may be renewed for additional one-year periods by
mutual consent of both parties. The language of the contract will incorporate the
provisions of this RFP, and the response presented by the successful bidder. The final
form of the contract will be negotiated with the successful fnancial institution.
Response:
Bank of America will be happy to enter into another signed contractual agreement with
the City for an additional five years. The bank and the City have enjoyed a great
partnership over the years, we appreciate your business and we would welcome the
opportunity to continue serving the City of Clearwater's banking needs and working
together to provide solutions for the needs of the City as it continues to grow.
We have provided Bank of America's Terms and Conditions for Treasury Services in the
"Attachment" section of this response.
Response to RFP #27-05 for the City of Clearwater
Page 45
r�
�J
Response to the Request for Proposal for
City of Clearwater
R. Firm Prices:
BankofAmeric �'�
�
Scope of Banking Services
The bidder warrants that prices, terms and conditions quoted in the bid are firm for the
contract period as stated in the Request for Proposal.
Response:
Bank of America warrants that prices, terms and conditions quoted in the bid are firm for
the contract period as stated in the Request for Proposal.
S. Cashing Petty Cash and Change Fund Checks:
The bank will cash petty cash and change fund check at no charge to the City or
employee cashing the check. Such check will be identified as such.
Response:
Bank of America is currently cashing checks for City employees at no charge and will be
happy to continue to provide this service during the new contract period.
T. Employee Benefit Package:
To facilitate employee use of payroll direct deposit, only banks with the capabilities to
provide workplace banking may be considered. A proposing banks workplace banking
program shall provide a checking account and a savings account for city employees with
no maintenance fees and no minimum balance requirements and a no fee check and ATM
card
Response:
Bank of America currently provides comprehensive Group Banking Services to the
City's employees. To promote the City's effort to have all employees participate in
direct deposit of payroll, Bank of America would like to continue offering Bank of
America At Work, at no charge to the City or its employees.
Benefits to the City's Employees
Some of the highlights include, two no fee checking accounts and a free debit card
provided there is a direct deposit to the account. Some other features and benefits are
provided below:
Benefits include:
• two free checking accounts with direct deposit
• interest rate bonuses on CDs and IRAs
• discounted rates on loan products
. • toll-free telephone access for account set-up and beneiits inquiries
Response to RFP #27-05 for the City of Clearwater
Page 46
�
•
Response to the Request for Proposal for
City of Clearwater
BankofAmeric ��
I'
Scope of Banking Services
dedicated web site for benefits information, online account opening and financial
education materials
• free online account access for transferring funds between designated accounts,
ordering check and more- -24 hours a day, 7 days a week
• free online banking with no fee bill pay
Please refer to the "Attachment" section for an outline of the specific rate discounts and
other benefits.
U. Check Cashing:
The bank will cash a valid city issued check for a current city employee at no charge to
the city employee or city. The bank will require that the city employee present a current
city issued id to take advantage of this option.
Response:
Bank of America will continue to cash a valid city issued check far a current City
employee at no charge to the City employee or the City. The bank looks forward to
continuing to add special services to the City and to finding ways to improve the City's
cost of services.
V. Purchasing Cards:
Included in the RFP the rebate the city would earn by using your banks purchasing card.
The City may or may not link purchasing cards to this contract.
Response:
Bank of America has included on the pricing form the rebate the City will continue to
earn on the current purchasing card program with the bank. By continuing the Bank of
America purchasing card program the City will not experience the implementation and
setup efforts that occur with a new service.
Bank of America is pleased to be the incumbent Purchasing Card provider for the City of
Clearwater. We have enjoyed a successful partnership since November of 1998, and
have worked with the City to expand the program to the level of participation today, with
over 500 cards and annual spending over $3 million. In 2004, the City moved 15, 665
transactions to the Purchasing Card, for a cost savings of $1,080,885 (based on a savings
of $69 per transactions from the Palmer/Gupta P-card benchmarking study).
As the incumbent, Bank of America continues to offer the City a team of support
dedicated to government clients, including an account specialist, Marwin Satchell in our
customer service department in Norfolk, VA, and an account manager, Jeri Winkleblack
based in Tallahassee, FL. Marwin, along with Jane Ritter and Angela Adkins handle the
Florida government client portfolio for day-to-day servicing needs. Jeri works with the
City from a strategic perspective, assisting with ongoing growth opportunities, industry
Response to RFP #27-05 for the City of Clearwater
Page 47
�
.
Response to the Request for Proposal for
City of Clearwater
BankofAmeric �'��
�
Scope of Banking Services
best-practices and technological innovations. Most recently, Bank of America worked
with the City to integrate the Purchasing Card data into the new Purchasing Card module
developed for the City's ROSS fnancial system, and demonstrated the internet based card
management tool, Works Payment Manager.
Currently, the Ciry has chosen to use InfoSpan as your card management tool; however,
Works Payment Manger has been reviewed with the City, and offers the most advanced
card optimization and control features available in the market. Using Works Payment
Manager's unique Active Card ControlTM technology, you can dynamically manage the
controls for your cards to adjust available funds, transaction daily limits, maximum
transaction value limits, merchant category privileges and more in real time. Works
Payment Manager also allows you to effectively manage your program data, including
exporting reports and data as well as the option to have direct integration into your
accounting system using Works Active Card IntegrationTM technology which allows for
tight (direct connection to system for data exchange) ar loose (batch files) integration
into ROSS.
In addition to the many benefits Works Payment Manager offers, Bank of America was
the first bank to migrate to TSYS's TS2 platform, the latest in credit card processing.
Through this industry leading position, we are able to offer your organization added
flexibility and functionality not offered through organizations processing on First Data,
EDS, or older version of TSYS. Examples of this advanced functionality include great
flexibility in maximum transaction amount limits and the ability to process larger AP
items with ease and automation. An additional key differentiator is the ability to more
closely control merchant category controls and limit card uses to specific merchants
where necessary offering the highest level of inerchant use control.
Bank of America believes that through offering the City these industry leading
technologies in conjunction with world-class customer service, account management and
industry best practice forum, we can assist you with growing your card program,
increasing cardholder satisfaction, improving your flexibility and controls and offering
greater opportuniry to make commercial credit cards a payment method of choice for
your arganization. We are committed to provide the City with the right solutions to meet
and exceed your business needs.
Bank of America continues to strive to maintain leadership in helping our clients to
optimize their card programs. We believe we offer the most advanced technology
solutions available in the marketplace along with concentrated focus on customer service
and account management unmatched in the industry. Bank of America welcomes the
opportunity to continue to work with the City of Clearwater as the Purchasing Card
provider of choice, and as the pricing proposal shows, we are committed to building a
long lasting partnership that is beneficial to the City of Clearwater.
Response to RFP #27-05 for the City of Clearwater
Page 48
Response to the Request for Proposal for
City of Clearwater
W. Check 21:
BankofAmeric �'�
�
Scope of Banking Services
In a brief narrative explain the current and status of the implementation of Check 21.
Include imaging of check and deposits, NSF items and interchange with other financial
institutions.
Response:
As Bank of America strives to be a leader in providing electronic means to receive
payments, we are pleased to announce that Bank of America is in compliance with the
legislation that was effected on October 28, 2004 — Check 2 L The Check Clearing for
the 21st Century Act (Check 21), signed into law October 28, 2003, and effective
October 28, 2004, was created to improve efficiency in the U.S. banking system by
eliminating the need to transport paper checks for presentment between banks. As a
result, it is essential to understand how changes in the check payments system created by
the legislation, commonly referred to as Check 21, could affect the City's current
accounts payable and receivables processes.
As the largest processor of checks among iinancial institutions, Bank of America is
prepared to optimize how we operate in an image-enabled environment and help you
through the next transfortnation of payments as our industry evolves.
� We are proud to advise the City that Bank of America is in compliance with Check 21 as
of October 2004 with the ability to share images with other owner banks of Viewpointe,
our image archive provider. We are also able to send image exchange files to other
iinancial institutions with which we have established agreements in place. In February
2005, Bank of America achieved the capability to receive image exchange files from
other financial institutions.
.
Bank ofAmerica's Preparation for Check 21:
While many banks were just gearing up to operate in an image environment, Bank of
America has been well prepared to be in the forefront of the transformation of the
payments industry.
• As the largest processor of checks, we understand the significance of
the Check 21 legislation
• The bank has had several integrated transition teams in place to help
ensure a smooth transition to the new processes required for image
exchange and the creation of IRDs (Image Replacement Document)
• As the first bank to institute image technology with wholesale lockbox
operations, Bank of America is recognized as an innovator in
implementing image technology
• We will continue to invest in image capabilities that bring new features
to our clients, and position the bank to flourish in an image-exchange
environment
Response to RFP #27-05 for the City of Clearwater
Page 49
�
�
Response to the Request for Proposal for
City of Ciearwater
BankofAmeric �'��
�
Scope of Banking Services
We continue to be committed in helping improve the efficiency of the U.S. check
payments system and to developing new products so that the City can maintain and
improve efficiency during this transformation.
December 2003
• Bank of America began piloting Remote Deposit Service to convert
eligible checks to ARC (Account Receivable Check Conversion)
transactions and use image technology. Market rollout coincided with
the effective date of Check 21 on October 28, 2004
October 2004
• Processed return items from transactions originated via image on the
image returns platform
• Shared images for processing, leading industry toward check truncation
• Offered clients Image Cash Letter service for sending images and data
files in lieu of paper cash letters
November 2004
• Sent image exchange files to other financial institutions with
established agreements outside the Viewpointe member banks
March 2005
• Receive image exchange fles from other banks with established
agreements outside of the Viewpointe member banks
Figure 1.1 — Regular check Image Replacement Document (IRD)
.o1i5o0120.
oiio4izooa o
esa��aa9�9 0
This a a LE6AL COPY ol your N
ched. You can uce rt Oro same m�
�Y YW �Wd usa IAe alginal � S
checlC ,.\.� �
O �
PI ymj
mo
�o
A �
O �
O
O
m
. y
�
Original Scanned Front Image
+� sl
� ;��^ ��
� � � . �'�y � i7d0.2 ' �neai
uvn9 '
�.
��o�E��_-- ��z9s �%
�Y^�-!_�. ���� . - /rl11 i� I �1 N1 Li. �...
"f �
/
� ���r
12345678�' l45 ��'00000 29 54 5f
4�:000067894�: 1236567Br Oi45 t00000295�.5J'
Optional 2D IRD Identifitalion
Barcode Securily
Feature MICR fne hom original check-
Now that Check 21 has gone into effect, banks will be allowed to process a paper substitute
check created from an electronic image of the original.
Response to RFP #27-05 for the Ciry of Clearwater
Page 50
•
.
Response to the Request for Proposal for
City of Clearwater
X. Accepting Credit Cards as Payment
BankofAmeric �''
�
Scope of Banking Services
Include the fees your bank would charge for the processing of Visa and Mastercard
transactions. The city may or may not link credit card processing to this contract.
Response:
Bank of America is pleased to be able to continue to offer the City of Clearwater the low
processing rate of Interchange plus .07% and $.15 per transaction. There are no monthly
minimums, no statement fees, no charge for supplies, and all Interchange expenses are a
direct pass through from the card associations. In addition, as a part of the service with
Bank of America, the City of Clearwater has a dedicated Merchant Sales Officer, an
Account Manager, and access to Bank of America's twenty-four hour Differentiated
Service Team.
The Visa and MasterCard 2005 Interchange Programs are provided in the "Attachments"
section of this response.
Response to RFP #27-05 for the City of Clearwater Page 51
�
Response to the Request for Proposal for
City of Clearwater
Additional Information and Services
Remote Deposit
BankofAmerica�'i�
I
Additional Information and
Seroices
Remote Deposit Service is a desktop application that allows our clients to electronically
clear checks through two channels, ARC (Accounts Receivable Check Transaction) and
Check Truncation (Check 21). The service provides the following capabilities:
Conversion of eligible consumer checks to ACH transactions (check
conversion)
• Use of image-based technology to process business checks as substitute
checks or Image Replacement Documents (IRD's) (check truncation).
With this service, our clients are provided with either low speed or speed ar high speed
scanning equipment. The accompanying software automatically determines the optimal
clearing path far each item — either ARC or IRD. Items are scanned individually, an
image of the front & back of the check is created and the MICR info is captured.
The City's operators will have the opportunity to review each item, key in the dollar
amount along with additional info the City needs for its receivables, and make
corrections, if needed, prior to submitting deposits. The deposit information can then be
tracked via Bank of America Direct.
This service will revolutionize the deposit process and potentially reduce the number of
courier trips to the Bank. We are excited about the opportunity to bring this new
technology to the City.
Features of Remote Deposit
• Remote deposit capability — Deposits can be made to Bank of America
electronically, with image transmission in U.S. locations where our bank may
not have a physical presence
• NetDepositTM Decision Gateway — The only technology that is designed
with built-in intelligence to determine the optimal check clearing path—
conversion to ACH based on Accounts Receivable Check Conversion (ARC)
rules or substitute check/Image Replacement Document (IRD)
• Imaging capabilities — Checks are scanned at the earliest point in the
payments process at its desktop, eliminating the transportation and processing
of paper payments
• Low-cost entry to electronic process — For a minimal cost, the City can
begin moving from paper deposit processes and experience the electronic way
of handling its receipts
How Remote Deposit Works
• There are two ways that the City can benefit from the speed and efficiency of an
electronic collection process compared to the paper check clearing process: check
Response to RFP #27-05 for the City of Clearwater
Page 52
Response to the Request for Proposal for
City of Clearwater
BankofAmeric �''
I
Additional Information and
Services
conversion to an original ACH debit transaction and check truncation via image
technology to a substitute check/IRD. Both methods will enhance the City's funds
availability and reduce accounts receivable double posting. In addition, for any items
returned as fraudulent or insufficient funds, the City is notified of the problem faster and
is able to take action more quickly.
Check Conversion — Our Accounts Receivable Check Conversion (ARC)
service converts an eligible paper check into an ACH debit transaction, based
on the National Automated Clearing House Association (NACHA) ARC
rules. At the earliest point in the check collection process, the City may use a
desktop scanner to create an image of the front and back of each item and
capture the MICR line information of the item for deposit. The City can then
key the dollar amount of the scanned check, along with additional information
required for its receivables process, and submit the items for deposit. The
MICR line data and check images are transmitted for processing, reviewed
based on bank and client-defined rules, batched and converted to ACH for
settlement to the City's account. Items scanned at the point of collection must
be destroyed within 14 days; however, images of scanned items are to be
retained by the client for two calendar years in accordance with ARC rules
• Check Truncation — With the passage of the federal Check Truncation Act
� (also referenced as Check 21), the City is now able to authorize and process
eligible items as substitute checks/IRDs. Prior to October 28, 2004, the
remitter must give consent for the truncation of the original check. After
Check 21 was effected in October 2004, no consent is required
•
We would welcome the opportunity to explore with you how Remote Deposit Service
can benefit the City.
Remote Payments Online (RPO)
Overview RPO
Bank of America is aware that the City currently accepts credit card payments over the
internet via a third party vendor. We are including information on the bank's automated
collection service, Remote Payments Online (RPO) as an alternative due to the fact that
we maintain the State of Florida contract for this service.
Remote Payments Online offers multiple payment options for the City's customers in the
form of IVR, ar Web via ACH debit or credit card.
How RPO Works
• The City notifies customers of Internet, and IVR payment capabilities
• Customers either logon to the City's Website, RPO Website, or dial a phone
number provided by the City to initiate payment
Response to RFP #27-05 for the City of Clearwater
Page 53
C�
•
Response to the Request for Proposal for
City of Clearwater
BankofAmeric �''
I
Additional Information and
Services
• Customers enter the required remittance information defined by the City (i.e.,
contact name, account number, dollar amount). In addition, some entities
provide a Personal Identification Number (PIN) along with their bills, which
allows its customers to verify and authenticate their identity
• Customer initiates payment via ACH debit, credit card, or debit card
E-Check
• If ACH debit is selected, the customer enters required account information
(checking/savings account number and ABA) and any other required
information to accompany the payment. A batch file is sent to Bank of
America for processing
• The ACH items settle to the City's account next business day and Bank of
America settles credit/debit card transactions via ACH the next business day
Credit Card
• If the card option is selected, the customer enters required card information
and the transaction is processed through a connection to Bank of America
Merchant Services
RPO Features
• Ability to accept both consumer and corporate transactions
• Ability to accept ACH payments, credit card and debit card transactions
• Multiple input methods available including Web, voice, or touch-tone
telephone
• Ability for the City to customize remittance reporting
• Flexibility for the City to customize Web payment screens
• Real-time reporting of transactions via the Internet
• Ability to export data in a Comma Separated File (CSV) or Fixed File format
• Ability to automate a daily file delivery directly to the City's electronic
mailbox in several formats, including EDI 820, CSV, and Fixed File
Benefits for the City
• Consistent payment processing and reconciliation
• Enhances cash flow
• Reduces paper processes
• Easy Web template design and integration
Response to RFP #27-05 for the City of Clearwater
Page 54
�
•
Response to the Request for Proposal for
City of Clearwater
BankofAmerica �''
I
Additional Information and
Services
• Phone payment provides a convenient alternative for end users who may not
have Web capabilities
• Seamless and effortless updates to the City's system of record
• Ability to brand with the City logo
Benefits for the City's Customers
• Utilizes the City's current Website
• Offers multiple options for electronic payments
• User-friendly, simple screen design
Response to RFP #27-05 for the City of Clearwater Page 55
�
•
Response to the Request for Proposal for
City of Clearwater
BankofAmerica�'�
�
Additional Information and
Services
Far the City's convenience, a demonstration of RPO can be found on the Internet at
http : //www.remote�ayonline. com.
Fb Efk Vbw Feva[es Tods Meb
_-_ _ __-_- _-_._..
_"________"_
:�e� - �+ - U� � G}!'�ls�a� ,�F«oc�
naaess �n�:fhw,w..�wew+e.�
—_—.____
��ywabaearch - y',
BankofAmeric ��'
�
waleom� m th� Dame GM�rI
_ . ......_ .
��-n,.
s�cmea u�sa�.�: P�Me:, �ii rws� �Ganm • aMYlydo {QjCwance Ma,e
Thank you for your interest in our Electronlc Receipts Solutlons. Our
SoIWOnS tlBlNef a wltle fange of fleltlhle antl potmefM1ll CBpebllltles [o
meet your business requiremeMS.
TakE B f/i0mefll [0 leam mofe abOU[ ouf COmpfEhEn4NE 9oIWonS.
O 3009 orinc�ton �<am,lnc uodae�d o1/13/3009
I J
g-So�, I � --------�-f i - ��l.t ��x
j�RSt I�_ W O L/ � � � � S � 6J � �'_ I :� 1 _l � � 3i [I� "__ .._. _ J`i"i� �� 9:�PM ..
U�(������������������J�Jx�� I,�°li�.�c� ,���
We would welcome the opportunity to discuss the features and benefits of this service to
determine if it is a good fit for the City.
Payee Positive Pay
Bank of America's Payee Positive Pay function was introduced to our clients on
February 28th, 2005. An overview of this service is provided below.
Functional Overview
With the success of positive pay in helping to identify potentially fraudulent checks with
altered amounts or counterfeit and duplicated checks, fraud artists have moved to altering
or modifying the payee name on stolen or copied checks with valid serial numbers and
amounts. Payee Positive Pay adds another level of security to positive pay by examining
the payee name and comparing it to the City's issue information to determine if the payee
has been altered.
Bank of America Payee Positive Pay is an image-based fraud prevention tool that helps
detect false or altered payee names on checks presented to the bank. Any payee
discrepancies will be reported to the City for review and the decision whether to pay or
return the item. This allows the City to receive notification of suspicious payee names
early in the process, providing an efficient and cost-effective defense system against
check fraud.
Response to RFP #27-05 for the City of Clearwater
Page 56
Response to the Request for Proposal for
City of Clearwater
How Payee Positive Pay works
BankofAmeric �'i�
�
Additional Information and
Services
The City would send the bank the check issue information by the applicable deadline
prior to distribution of checks. The City has two options for sending payee name
information to Bank of America:
Day 0
• Issue match — Modify your current check issue file to include an added Payee
Name field. Payee name submitted via issue file must match the payee name
as printed on the check
• Seal match — Print the payee name in an encrypted seal as the check is
printed, using print technology provided by our vendor
• Checks are presented to Bank of America for payment
• Payee name is "read" from the image using digital technology and compared
to payee name within issue file, or payee name within the encrypted seal on
the face of the check
• DDA posting occurs
Day 1
� • Each day, payee name exception items are reviewed by Bank of America and
are available to you via fax by 1:00 p.m. ET for all Payee Positive Pay
accounts. Account Reconcilement Operations will contact designated
contact(s) via phone, followed by a fax report of exception items, along with
images of the exception items. Note: Items identified as Payee Positive Pay
exceptions may also be identified as other Positive Pay exception types (e.g.,
Duplicate Paid, Invalid Dollar Amount, etc).
•
The City, or your designated contact(s), review the items (and images) and
submit a decision via fax so that it is received by Bank of America by 4:00
p.m. ET. In the event that the bank does not receive the City's decision by the
deadline, we will process the item according to the default chosen on your
existing Positive Pay services. If we receive contrary information regarding
whether to pay or return an item, the bank will return the item.
Global Advice (Receipts)
The Bank of America Global Advice Receipts service provides complete remittance
information electronically of all ACH transactions to the City's accounts via a Web
browser. Email notification capability is included as part of this service. The email will
contain the last four digits of the account number to determine which account to view.
Information can be downloaded in a comma-delimited file tab-delimited format to create
Excel worksheets, customized reports or to download information into your receivables
system.
Response to RFP #27-05 for the City of Clearwater
Page 57
�
�
Response to the Request for Proposal for
City of Clearwater
Benefits to using Global Advice include:
Faster, Convenient Research and Information Updates
BankofAmeric �''
�
Additional Information and
Services
• Allows the City to access detailed ACH payment and remittance information
online from a desktop PC
• Access remittance information when convenient, on a schedule that meets
your needs, from any location or site
• Retrieving a particular item is quick and simple — search by name, amount or
date
Improved Productivity, Reduced Costs
• Eliminates the need to search through paper remittance information
• Reduces the time and expense of investigating receivables questions
• Takes advantage of automation to speed up accounts receivable processing
Response to RFP #27-05 for the City of Clearwater Page 58
�
�
Response to the Request for Proposal for
City of Clearwater
Attachments
1. Banking Centers List for Pinellas County
2. Fortune magazine's March Issue Article
3. Certificate of Qualified Public Depository
4. Bank of America Direct Sample Reports
5. Bank of America 2004 Annual Report
6. Terms and Conditions for Treasury Services
7. Group Banking — Bank of America At Work
8. Visa and MasterCard Interchange Rates
9. Regulus -
a) Retail Lockbox Fee Schedule
b) Image Services Information
c) Pricing Proforma with Image Services
Response to RFP #27-05 for the City of Clearvvater
(lo at1��h m�n't�
w�� ������
��,d� Ta� 9
BankofAmerica�'�
�
Attachments
Page 59
� � } } } } Z � � } � Z } } } } } � } } Z Z } } Z Z Z Z � � �',� � Z Z Z � �
�m' a� a� a> a> a� u� a> m m a� ca� � a� m a> � a� a� m d a> m a� a� a> d m a� a�
� o c� a � � o � � a � � � c� c� c� � � c� � � o
a� •- •- •- •- •- •- •- •- •- •- •- a� •- •- •- m a� a� •- •- •- �- •- a� a� •- •- •-
.Z Z Z',Z Z Z� Z Z Z Z Z Z Z Z Z Z Z Z Z Z� Z Z Z��� Z Z Z Z Z�� Z Z Z'.
a� a� a� m a� a� $ a� m m a� a� m m m a� a� a� m m d o a� m m o 0 0 0 0�� m.
��, (A , M�. M, t/1 tp f/1 � tq �q tq tp N tA tA tA fp VJ (A M Vl N N tA Vl Vl Vl `�VJ tll U) t�A N t�p N y N(p tlJ W� tA �.
. ' _ C — — — — — — — — — — — — — — C _ _ — C C C — — _ _ _ C C —
�'�,. 7 I 7, 7� 7 3 7 7 7 7 7 7 7 3 7 7 7 7 7 � 7 7 7 7 7 7 7 7 7 7 7 7.
I LL ' LL ' LL LL LL LL LL LL LL LL LL LL LL lL lL LL LL LL LL Il LL LL LL LL LL LL LL LL LL. LL LL
a0 00 O� O a0 O(O 00 I� Cfl O� I� N 1� CO �A M � tn (D � O 1� M � O O ��t O M� CD O O M � N
� CG OD O I� O� N I� � N� C� h a0 �A CO � 00 O O� CO � � 00 O� � N O N � M M M � O�
CO C� I� O� aD a0 �� CG � O� � N CO O � O� aD ����� O� �� CG 00 I� O� N� CO I� 1� �� n
��. O� �f') lI� � CO �!� M� CO (O I� M�� M t� O� M N � ��� I� 00 � N I� � N CO W� N M O
CO tn � t0 CO N N� h tn tn � � � lA lf) fp M M� O CO ln eh � O� CO � � N 1� � CO O O M Ch M
� N�� 1� CD (O �T N CO C� �� M� ch M� M('� C� N c� � O� I� 00 t� 00 aD a0 �� N N O� O� st
'. � I� f� N t!') � CO � I� �A f� h���t f� I� M� �A � �A lI') C7 C7 I� f� t� I� 1� f� ('7 M M M M
�� � � � ti � ti ti � � ti ti ti � � � ti�ti � � � � � � � � � � h � � � � � � � n n�,
� N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N
� � � ti ti ti ti � ti ti ti ti ti � � ti ti � � � � � � ti � � � � � � � � � � � � � �
O` M' � 11� N�� Ln tt t� � CO �� I� ef � aD aD h � ��! � � a0 aO ln Ln ����, ln N � N I� N N I�
ti', CD CC lA (O � CO CO �A � tn � CO CO � O� 6� O I� I� I� (O � I� O a0 00 a0 a0 a0 a0 a0 00 1� I� I� f� O.
I� �. I� f� I� I� . I� I� f� I� t� 1� I� I� 1� I� (O f0 f� f� I� I� I� I� .!� f� CD CO CO CO CD . C4 f� I� � ti f� f� f� 1� �
M��, M CM CM M, M M M('MO ('�O M M M M M C�q � f� M M M M C'M7 M M�� M M M�. M M M M M M M M�
�� M" N�, t/1 t/1 � f/1 tA W N(A f/1 (q V) Vl fp Vl tA fA fq Vl t/1 W Vl 41 Vl tA Vl � M M Vl fn Vl t/! Vl (/1 ' Vl Vl fq W
� f0 fC f0 f0 f6 N f6 f6 f0 f0 fD lC f0 l0 f0 N f6 (D f0 f0 f0 (0 f6 f0 f0 (0 f0 f0 f0� (0 f0 f0 f0 f0 N f0 fD .(0
N��� N N d N N� N d d N d N N N N N d N N� d N N d N�� N d N N d N N
I C� C' C C C C C C C C C C C C C C C C C C C C C C C C C C C C C C C C� C� C� C C
'a ' a a a a a' a a'a a' a a a'a ' a a'a a'a ' a' a a a' a a' n. d' a a a a a.' a o=' a a a a
0
0
N
�
� � -p 0` � > � ]
Z "0 "0 m '� O O fn
� > > � y w y � � y 'o '� � � Z m Z � .
�-om ao' ' o>v�c v cn v� > > p oL °�rnv a� �v-o
y� a� �>, v' m Q� co c"o m -o m �•c � a0 �� r o � p � o>>;
�L y� om o� � o.�O��a °�� �=�0� o>Y m° a� 2�. o ��mmQ
> Z U' 3� �>>, N N ta
� U C. fC0 ����> 7 y n C m�f0 d�� fn t�(CO m� C m J J�� 2 C fn m Q�. C C d
C N N M C t U cC w O� t�. .
ca m o> E� � c�� c a°�i ��� a°�i d ao m m � m� cn C� m w� m� c�o c�OO m°r�° ci) a�i a�i vf6i
C Z r � U l� O m y O O O�� O �A O O 00 N O� O� O O O O M O t0 � O O� O M � a
� � I f� O N�t � N O � O�(O O f� a0 CO O(O O O O Q� � CO O M� O � N O � OD M O�
� N� O) '� �1') O f� CD N N(O CO O t� N N d� O.-- a0 M tD N O�A O�� t0 M O� �A O � � O M a0 a0 ��,
�'�- I N CO N � �A � � � c'� N � N � � � N � N � LL� CD ��- M M� M N �� � � oD CO O�
�
�
. � , �0 Q', N C , Z' .
m ca -� °o '�p
o >. rn °- ;� � r � '
`y F- � N r' �(0 J � j C�
++ w. � 1Y f/i @ W � �(0 �
�� 7 � � «0 � � � � y � Z+
� L � «; O p � >, Y O � � � � m fn cp
a� d v, o c �n co � � a� � °� s� E V � m a ' T m �_
� N V C L N O N � C d> y m O U J�� �`'G � �m � O N
> Y d > T U m� � C 'p E� Y!q N C N iA �� m �� N�'L � C'C . f6
m� � �°`° �:° cQ�$� >,ac°i'o m �� o m��Em ca�c�C�{ °oa m�9' E v�
�� Z,o � o00w a��� o �°'c�a c�� � m�w �� �w�� .��� ydcn �cna
d= C C w w O C= t�n L N'� «L• V�l N� a V m N O ai L� O O O��� t y O O N+L�' •L•
�� O O y 7 Vi ��� O N(0 O� 7� 7 y�� r'�il .� p N w ai u`�i @(6 cC CO C t`�il vl � p p
m. m U � LL C� C y�� Z� fn (/) fn � W C7 m W C C� Z� C C C J d F- CO d C C J(n �� fIi
' (9
L C.
. � N � � � � � � .�L �C . y �.
7 � � �. � � � � � � � � � � � N O O O O � (p
m°: :: a� a� m a; � a� a� m a� a; a; a� m�£ t' �-� -e a a' y�� m c�o
� m m m m m m m m m io io m ca m c c m ca m co m co
'� � � � � � � � � � � � � � � �° � � � = 2 = 2 2 2 c`�o c��o c c ' °c °c d
m af0i a�i a�i a�i a�6i a�0i m af0i a�°i a�0i a�0i a�i a�i a1di ��'�a rn rn rn rn v� rn v E E E E E E a� a� '� �� '�� �E �
m c� c� Uc� c� c� c� c� c� c� c�c� c�c� o o c� J JJ J J J ia a a n. a a a a u�u� ii v°�' in.
J' J J J J J J J J J J J J, J J J J J J J J J J J J J J J J J J J J J J J J J.
�LL LL�LL LL LL LL LL LL LL LL lL LL,LL.LL LL.LL LL LL LL LL LL LL LL LL LL LL LL lL LL LL LL lL LL LL LL�LL Il LL�
�r>-',�zzz>->-zz';���I>-,��,�
a� a� a� a� a� a� a� a� a�' a� a� a� a� ��.
� � o � o � � � � � � o � � �.
.Z .Z .Z .� a� a� a� .� .� .� .Z .Z .Z .Z .� .� .Z .Z
tl1 � t�p �. N'. f�d � y� fq N. fn � tp Vl '� tp f/1 M N W' Vl (A ' N�.
_ _ _ = C: C C = — — — — — — — — _ _
7 7�. 7'. 7 . � 7 7� 3.. 7 7�. 7>>.. 7' 7' 7.
LL LL LL LL LL LL LL LL LL LL LL LL ' LL LL LL
N V���O O��.O.� M.f� ��i� C'q�'N � M.��OO�.M'.
N Ln �tp ����,N (O �.CO�N M t0 .– CO'tC)�M N..
��� h`7 � M M CO CC O f� � l� , f0 N(D �,
OD : O � � O '� M ' � , � CO M ��, O N '. � ' OD M � � � ' 00 �
O�.N�. •.cD�.CO c+�:N�O CC'Cfl Kl� ,M M�I� ���G"
CO f0�� � O���CO N N�f��-� ���,�'����.M�'�.(G�
M 00 00 �� 00 � M� LL� , 00 M' 00 M M', �� M
� ti.� � � � � n � ti � � �,ti ti � ti �
N N N N'N'N N'N N N N N'N N'N'N N N
� � � �,� � � � � � � n �I�,� � � ti',
CO a–�.--.� .--����fO�M N N M O�'.N�.O'0���.'�,Cfl'
O � O O'.��,0'����0 O O �'�;�'����Op.Op�O�.
f� f� f� !� f�'I�.I�.f� h f� �!� I��,I��.f� CG CO�I���
M M C'7�M Cr1 M M M�C7'M�-('7 M'�.M'�,M'M����t�M�
c'� M M ch c'� c'� c'� c'� M M c'rl c'� ' c'� , M, c'� , M M, M.
V) V) fn . M M N�. V) tA tq tA M M��. tA tA '. M M�. tA �� tq
N f6 lC f6' f0 N f0 f0 f6 N f0 (0 ' f0 N' f0 f6 (0 f0,
N N N N N N, d d d N d N d' Nf N N N N
C C C. C C�� C'': C C C C C Cs C'� C'� C' C C C�
d a a a a a a a a a a a a a,a a a'a
' �
�,
� w r � v
o >
c°� c°nZmz o ai > c
z °' Z Z z'cn '> ¢' Q`-°.
'� N� N N�� �� Ci> �� N' y y�Z�,Q M W,
> � a.. � �, �. � �' > y Z. >.. � . 0� (p �
[Q (%i Q (/� > tA , f/� Q .% Q Q (/� f`6 a � �
"- t �� f�/1 L L a �� p . L , U (/i (/i L , � . L ',, C . � C ., y ..
� ... . � .v w+ � L � L t "' '"' ,.. N H d � � �.
C� M' `p���M � ����'�CNO �-�-M���C�O U ��
O I� , O ��fi M��'� O� � O O � W fA H
O C7��'�CO��-O t7��t'M O M O�O O''O�O CD �.
� CD , � N O O �' � f� a0 f� a0 M' N .- � f�
ti('7 , r, 00 ll� N�- N. a- . O) M lA N �-- '(O � �. r
�' �
N > N 7
3 QQ�' y �,
� 'm
L . H . �,. � L .�. ' . N � � 7
� I�
V O V, �� � d' >' d d �I � C
af0i � � � ' -� s N � 3 @ � a � — � y
aa�i c v g v' `° (7 v, � ' a� cn m
a��Q oM �u� 3. � m� .: �
� cq °�', �� m', v o�S � 3 m v) c c�
,Y O '�'o�,y L L-� C�.. O O tn
a��> n fn r"+i1 ' c6 N C O O O�, � N(D d
incomiL c c ��',�zzzcl)F-�iI—I—I—
s rn rn rn rn rn rn rn rn v� rn rn rn rn rn rn rn �
V ��� � � �. ��, �� �... �� ��, � C C f0
� 7 7 7 7 7 7�� 7� 7. 7'. 7 7� 7 7 7.
� � � � � � � �•����.� .����� � �..0 N
m m�n �' �' �' w v� u� , v� v� �n vi m u� a n
� � ��, ��� ��� f� f�, N
N N N N N N N' N�� N d, N +,d, , 4? C C 7
N N N N N N N N�- � N N N� N O O tn
aaaa.aaaaaaaaaaa �P.a
inininininininv�,ininu�inininin��`�
J J J J J J J J'J J J J J J J'J J'J
LL LL LL LL lL LL lL LL ', Il ' Il LL LL LL LL " LL LL LL Il
•
�
�
_�
Custom Reprint March 7, 200�
_ ,
�
�
', i
�
�
z
�
t's no easy thing to get to the top of FORTUNE's 23rd annual Most Admired list. But making the
achievement more remarkable still is that the voters in this corporate Oscar race are each company's staunchest
rivals. That's right, once again FORTUNE and its survey partner, Hay Group, asked the top managers at 582
companies (the largest by revenues in each sector) to judge their competition. In all, 10,000 executives,
directors, and securities analysts rated the companies in their industry on eight attributes. To find our overall top
ten, we then asked voters to name the companies they most admire in any business from a pool that included last
year's top quartile of finishers plus the top two on each industry list.
Corporate reputation:
eight key attributes
To arrive at each company's score
on the industry rankings, we
averaged the scores of these
eight criteria.
Innovation
Financial soundness
Employee talent
Quality of management
Use of corporate assets
long-term investment
Social responsibility
Quality of products/services
Produced exclusively by Fortune Custom Reprints. 02005 Time Inc. All rights reserved.
�
•
•
�
u
•
•
.
.
,.
�-TL__�
�. .
,, `_;- �i
�i � : � 3: r-,±,
C` ` _.►"_ �
-�.: �=.���.
��
STATE OF FLURi�A
Qffice of the Treassuer and Insurance Corrunissionrr
Diti�sion af Treasury
Burasu of Callateral Sccuciies
CERTI�'ICATE OF QUAI,IFIED PUBLIC DEPOSITpRX
Uh'DPR'iiii FLO�A SEGiJRI:Y FOR
ptJ�LIC DEFOSITS ACT
This is to ce:tfy that
BAN�C OF ��RICA, N.A.
101 S OLTTH ?RYQlh
CHARLOTTE, T'ORTH CAROLNA
has fuily qvalifiad as a public d�pository pursuant co C3yapter 280, Florida Statuces� othrnvise
known as tlxe Florida Securiry for Fublic Deposits Act. As such, said b$nk or savi�gs assotiation is
h�ceby designated to raeive pub�ie deposita, as defined in Subsection 284.02(I3), Florida Statutes.
Giveu und�cr my hand this 17th day of AuEus� 1999.
. ,
TRF.ASURE,A, STA� OF Y�.ORmA �
DIt-1007
Rer. 9r92
L_J
•
C�
�
As of 10/06/2004
Bank of America Accounts
Bank of America
US GCIB - SGIR Test
Current Day Summary and Detail Report
Bank of America, Illinois ABA: 071000039, US Dollar (USD) Accounts
0004119118 Demo IL IDS Acct Last Updated: 10/06/2004 16:38 CST
Detail Credits
Amount Customer Bank Immediate 1 Day Float 2+ Day Float
Reference Reference Availability
PREAUTHORIZED ACH CREDIT
117,769.37 0000000000 42784538287
13,872.15 0000000000 42784517559
6,571.45 0000000000 42784520759
4,488.27 0000000000 42785312719
2,026.64 0000000000 42784523489
10.58 0000000000 42785364254
TOTAL 144,738.46 # of Items: 6
LOCKBOX DEPOSIT CREDIT
1,248,866.26 8888888888 00050503845 347,370.14 850,656.67 50,839.45
�TOTAL 1,248,866.26 # of Items: 1 347,370.14 850,656.67 50,839.45
NCOMING MONEY TRANSFER CREDIT
248,704.07 1005010308 041005010308 248,704.07 0.00 0.00
TOTAL 248,704.07 # of Items: 1 248,704.07
ZBA CREDIT
51,538.00 0000000000 00722004217 51,538.00 0.00 0.00
204.31 0000000000 00722005235 20431 0.00 0.00
TOTAL 51,74231 # of Items: 2 51,742.31
TOTAL CREDITS
1,694,051.10 # of Items: 10 647,816.52 850,656.67 50,839.45
Detail Debits
Amount
PREAUTHOWZED ACH DEBIT
Customer Bank Immediate 1 Day F'loat 2+ Day Float
Reference Reference Availability
49,745.61 0000000000 42784537989
1,275.88 0000000000 42785312727
99.75 0000000000 42785312728
34.00 0000000000 42785312724
14.85 0000000000 42785312726
4.95 0000000000 42785312725
TOTAL 51,175.04 # of Items: 6
�BA DEBIT TRANSFER
1,248,866.26
248,704.07
0000000000 00722003333
0000000000 00722000341
Report Created By: demo Jane Ferrero Page 1 Report Created: 10/07/2004 11:37 CST
Bank of America
US GCIB - SGIR Test
Current Day Summary and Detail Report
144,942.77 0000000000 00722005511
362.96 0000000000 00722004001
TOTAL 1,642,876.06 # of Items: 4
TOTAL DEBITS
1,694,051.10 # of Items: 10
Bank ofAmerica, Texas ABA: 111000025, US Dollar (USD) Accounts
Demo TX 1 Acct
CURRENT LEDGER BALANCE
OPENING AVAILABLE BALANCE
CURRENT AVAILABLE BALANCE
1 DAY FLOAT
2 OR MORE DAYS FLOAT
3 OR MORE DAYS FLOAT
TOTAL CREDITS
TOTAL DEBITS
TOTAL LOCKBOX DEPOSIT CR
TOTAL ACH CREDITS
TOTAL INCOMING MONEY TRNSFR CR
TOTAL SECURITY CREDITS
TOTAL DEPOSITED ITEMS RET CR
TOTAL ZBA CREDITS
TOTAL COMMERCIAL DEPOSIT CR
TOTAL SWEEP CREDITS
TOTAL MISCELLANEOUS CREDITS
TOTAL ACH DEBITS
TOTAL CHECKS PAID DEBIT
TOTAL OUTGOING MONEY TRNSFR DR
TOTAL DEPOSITED ITEMS RET DR
TOTAL ZBA DEBITS
TOTAL 1NVESTMENTS PURCHASED DR
TOTAL MISCELLANEOUS DEBITS
Detail Credits
Amount
-651,474.48
113,100.00
-693,240.48
39,225.00
2,541.00
6.00
1,373,415.25
2,179,755.73
0.00
0.00
1,200,072.63
0.00
0.00
0.00
0.00
173,342.62
0.00
2,179,755.73
0.00
0.00
0.00
0.00
0.00
0.00
Last Updated: 1
# of Immediate 1 Day Fl
Items Availability
2 1,200,072.63
1
0.00
1 1,200,072.63
0.00
�
15:
0.00 0.00
0.00 0.00
0.00 0.00•
0.00 0.00
Amount Customer Bank Immediate 1 Day Float 2+ Day Float
Reference Reference Availability
INCOMING MONEY TRANSFER CREDIT
1,200,072.63 1005045509 041005045509 1,200,072.63 0.00 0.00
TOTAL 1,200,072.63 # of Items: 1 1,200,072.63 �
INDIVIDUAL INVESTMENT SOLD CR
173,342.62
Report Created By: demo Jane Ferrero Page 2 Report Created: 10/07/2004 11:37 CST
Bank of America
• US GCIB - SGIR Test
Current Day Summary and Detail Report
TOTAL 173,342.62 # of Items: 1
TOTAL CREDITS
1,373,415.25 # of Items: 2 1,200,072.63
Detail Debits
Amount Customer Bank Immediate 1 Day Float 2+ Day Flof
Reference Reference Availability
PREAUTHORIZED ACH DEBIT
2,179,755.73 000000000000 42787864640
TOTAL 2,179,755.73 # of Items: t
TOTAL DEBITS
2,179,755.73 # of Items: 1
909090909090 Demo TX 2 Acct Last Updated: 10/06/2004 15:24 CST
Description Amount # of Immediate 1 Day Float 2+ Day Float
Items Availability
CURRENT LEDGER BALANCE
OPENING AVAILABLE BALANCE
CURRENT AVAILABLE BALANCE
�1 DAY FLOAT
2 OR MORE DAYS FLOAT
3 OR MORE DAYS FLOAT
TOTAL CREDITS
TOTAL DEBITS
TOTAL LOCKBOX DEPOSIT CR
TOTAL ACH CREDITS
TOTAL INCOMING MONEY TRNSFR CR
TOTAL SECURITY CREDITS
TOTAL DEPOSITED ITEMS RET CR
TOTAL ZBA CREDITS
TOTAL COMMERCIAL DEPOSIT CR
TOTAL SWEEP CREDITS
TOTAL MISCELLANEOUS CREDITS
TOTAL ACH DEBITS
TOTAL CHECKS PAID DEBIT
TOTAL OUTGOING MONEY TRNSFR DR
TOTAL DEPOSITED ITEMS RET DR
TOTAL ZBA DEBITS
TOTAL INVESTMENTS PURCHASED DR
TOTAL MISCELLANEOUS DEBITS
�etail Credits
Amount
Report Created By: demo Jane Ferrero
245,226.00
237,164.92
244,802.00
415.00
9.00
0.00
10,519.70
2,882.62
0.00
10,519.70
0.00
0.00
0.00
0.00
0.00
0.00
0.00
304.92
2,577.70
0.00
0.00
0.00
0.00
0.00
Customer
Reference
10
3
Bank
Reference
Page 3
0.00
0.00
0.00
0.00
Immediate
Availability
0.00 0.00
0.00 0.00
0.00
0.00
0.00
0.00
1 Day Float 2+ Day Float
Report Created: 10/07/2004 11:37 CST
PREAUTHORIZED ACH CREDIT
3,852.16
3,369.09
2,103.44
603.11
204.17
155.00
92.90
73.49
49.34
17.00
TOTAL 10,519.70
TOTAL CREDITS
10,519.70
Detail Debits
Bank of America
US GCIB - SGIR Test
Current Day Summary and Detail Report
000000000000
000000000000
000000000000
000000000000
000000000000
000000000000
000000000000
000000000000
000000000000
000000000000
# of Items:
# of Items:
42790079065
42790079057
42787151530
42788029605
42790079013
42788014369
42790078996
42788015723
42790078993
42788621448
10
10
Amount Customer Bank Immediate 1 Day Float 2+ Day Flo
Reference Reference Availability
PREAUTHORIZED ACH DEBIT
304.92 000000000000 42788027414
•
TOTAL 304.92 # of Items: 1
CHECKS PAID DEBIT
318.78 000092001332 08730876323
2,258.92 000092001345 09030582580
TOTAL 2,577.70 # of Items: 2
TOTfIL DEBITS
2,882.62 # of Items: 3
TOTAL Bank ofAmerica, Texas ABA: 111000025 ***US Dollar (USD)***
Description Amount # of Immediate 1 Day F7oat 2+ Day F7oat
Items Availability
CURRENT LEDGER BALANCE
OPENING AVAILABLE BALANCE
CURRENT AVAILABLE BALANCE
1 DAY FLOAT
2 OR MORE DAYS FLOAT
3 OR MORE DAYS FLOAT
TOTAL CREDITS
TOTAL DEBITS
TOTAL LOCKBOX DEPOSIT CR
TOTAL ACH CREDITS
TOTAL INCOMING MONEY TRNSFR CR
TOTAL SECURITY CREDITS
-406,248.48
350,264.92
-448,438.48
39,640.00
2,550.00
6.00
1,383,934.95 12
2,182,63835 4
0.00
10,519.70
1,200,072.63 1
0.00
1,200,072.63
0.00
1,200,072.63
0.00
0.00
0.00
0.00
0.00
O.OG•
Report Created By: demo Jane Ferrero Page 4 Report Created: 10/07/2004 11:37 CST
Bank of America
• US GCIB - SGIR Test
Current Day Summary and Detail Report
TOTAL DEPOSITED ITEMS RET CR
TOTAL ZBA CREDITS
TOTAL COMMERCIAL DEPOSIT CR
TOTAL SWEEP CREDITS
TOTAL MISCELLANEOUS CREDITS
TOTAL ACH DEBITS
TOTAL CHECKS PAID DEBIT
TOTAL OUTGOING MONEY TRNSFR DR
TOTAL DEPOSITED ITEMS RET DR
TOTAL ZBA DEBITS
TOTAL INVESTMENTS PURCHASED DR
TOTAL MISCELLANEOUS DEBITS
TOTAL CREDITS
0.00
0.00
0.00
173,342.62
0.00
2,180,060.65
2,577.70
0.00
0.00
0.00
0.00
0.00
1,383,934.95 12
TOTAL DEBITS
2,182,638.35 4
0.00
1,200,072.63
0.00 0.00
Bank ofAmerica, Geneva SWIFT# BOFACH2X, Swiss Franc (CHF) Accounts
01444444444 Demo Geneva Acct Last Updated: 10/06/2004 07:04 CST
TOTAL CREDITS
TOTAL DEBITS
Detail Credits
Amount # of
Items
1,760,798.82 46
2,354,741.17 21
Value Date Amount Customer Bank
Reference Reference
ACH INCOMING RECEIPT
10/03/2004 1,500.00
10/03/2004 1,200.00
10/03/2004 600.00
10/03/2004 500.00
10/03/2004 500.00
10/03/2004 500.00
10/03/2004 410.00
10/03/2004 400.00
10/03/2004 300.00
10/03/2004 300.00
10/03/2004 300.00
10/03/2004 300.00
10/03/2004 300.00
0/03/2004 300.00
0/03/2004 300.00
10/03/2004 300.00
10/03/2004 250.00
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TR.ANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
601411111111
601411111111
601411111111
601411111111
601411111111
601411111111
601411111111
601411111111
601411111111
601411111111
601411111111
601411111111
601411111111
601411111111
601411111111
601411111111
601411111111
Report Created By: demo Jane Ferrero Page 5 Report Created: 10/07/2004 11:37 CST
10/03/2004
10/03/2004
10/03/2004
10/03/2004
10/03/2004
10/03/2004
10/03/2004
10/03/2004
10/03/2004
10/03/2004
10/03/2004
TOTAL
Bank of America
US GCIB - SGIR Test
Current Day Summary and Detail Report
200.00
200.00
150.00
150.00
150.00
150.00
150.00
150.00
150.00
150.00
150.00
10,010.00 # of Items:
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
28
C�
601411111111
601411111111
601411111111
601411111111
6014111ll 111
601411111111
601411111111
601411111111
601411111111
601411111111
601411111111
LOCAL CURRENCY WIRE RECEIPT
10/06/2004 18,372.00 1411111//600 SWI 601411111111
10/06/2004 1,017,623.89 NONREF 601411111111
10/06/2004 417,057.60 NONREF 601411111111
10/06/2004 32,334.72 NONREF 601411111111
10/06/2004 26,249.00 NONREF 601411111111
10/06/2004 17,263.86 NONREF 601411111111
10/06/2004 13,932.10 NONREF 601411111111
10/06/2004 4,837.96 NONREF 601411111111
10/06/2004 3,705.02 NONREF 601411111111 �
10/06/2004 3,674.40 NONREF 60141 1 1 1 1 I 11
10/06/2004 30,400.00 REF # NOT AVAILABLE 601411111111
10/06/2004 22,500.00 REF # NOT AVAILABLE 601411111111
10/06/2004 20,000.00 REF # NOT AVAILABLE 601411111111
10/06/2004 18,687.00 REF # NOT AVAILABLE 601411111111
10/06/2004 5,000.00 REF # NOT AVAILABLE 601411111111
10/06/2004 2,500.00 REF # NOT AVAILABLE 601411111111
10/06/2004 26,651.27 TRANSFER 601411111111
TOTAL 1,680,788.82 # of Items: 17
MISCELLANEOUS CREDIT
10/06/2004 70,000.00 REF # NOT AVAILABLE 601411111111
TOTAL 70,000.00 # of Items: 1
TOTAL CREDITS
1,760,798.82 # of Items: 46
Detail Debits
Value Date Amount Customer Bank
Reference Reference
LOCAL CUR WIRE PAYMNT ITEMISED
10/06/2004 10,689.70
10/06/2004 1,008,806.72
10/06/2004 9,120.00
10/06/2004 24,996.70
10/06/2004 19,152.00
10/06/2004 1,915.20
ACFAllllll
LSWA999
RFTT6466666
RFTT6466666
RFTT6466666
RFTT6466666
601411111111
601411111111
601411111111�
601411111111
601411111111
601411111111
Report Created By: demo Jane Ferrero Page 6 Report Created: 10/07/2004 11:37 CST
•
Bank of America
US GCIB - SGIR Test
Current Day Summary and Detail Report
10/06/2004 4,316.80 RFTT6466666 6014111111 I 1
10/06/2004 3,770.08 RFTT6466666 601411111111
10/06/2004 860.84 RFTT6466666 601411111111
10/06/2004 8,733 A 1 RFTT6466666 6014111111 I 1
10/06/2004 20,000.00 RFTT6466666 601411111111
10/06/2004 20,145.14 RFTT6466666 601411111111
10/06/2004 2,857.60 RF'fT6466666 601411111 I I 1
10/06/2004 6,080.00 RFTT6466666 601411111111
10/06/2004 4,500.00 RMT"T6466666 601411111111
10/06/2004 38,759.48 RSTT6466666 601411111111
10/06/2004 1,017,623.89 SWCA 111111 601411111111
TOTAL 2,202,327.16 # of Items: 17
INTERNATIONAL TRANSFER PAYMENT
10/07/2004 30,036.31 RFTT6466666 601411111111
10/08/2004 7,655.00 TGTT6466666 601411111111
TOTAL 37,691.31 # of Items: 2
ZBA/RTS SWEEP DEBIT ITEMISED
10/06/2004 92,833.50 FXD0001111111 601411111111
10/06/2004 21,889.20 RFTT6466666 601411111111
TOTAL 114,722.70 # of Items: 2
TOTfiL DEBITS
2,354,741.17 # of Items:
21
Bank ofAmerica, London SWIFT# BOFAGB22, Euro (EDR) Accounts
Demo London Acct
TOTAL CREDITS
TOTAL DEBITS
Detail Credits
Value Date Amount
# of
Items
796,499.37 6
37,526.76 3
Customer
Reference
Last Updated: 1
07:04 CST
Bank
Reference
LOCAL CURRENCY WIRE RECEIPT
10/06/2004 9,160.87 REF # NOT AVAILABLE 600811111111
10/06/2004 1,037.56 REF # NOT AVAILABLE 600811111111
TOTAL 10,198.43 # of Items: 2
INTERNATIONAL TRANSFER CREDIT
10/06/2004 783,082.81 REF # NOT AVAILABLE
10/06/2004 1,442.00 TRANSFER
10/06/2004 48.56 TRANSFER
TOTAL 784,573.37 # of Items: 3
600811111111
600811111111
600811111111
�EVERSAL
10/08/2004 1,727.57 DEPOSIT 600811111111
TOTAL 1,727.57 # of Items: 1
Report Created By: demo Jane Ferrero Page 7 Report Created: 10/07/2004 11:37 CST
Bank of America
US GCIB - SGIR Test
Current Day Summary and Detail Report
TOTAL CREDITS
796,499.37 # of Items: 6
Detail Debits
\J
Value Date Amount Customer Bank
Reference Reference
LOCAL CUR WIRE PAYMNT ITEMISED
10/06/2004 5,000.00
TOTAL 5,000.00 # of Items:
INTERNATIONAL TRANSFER PAYMENT
10/06/2004 21,966.07
TOTAL 21,966.07 # of Items:
INTERCO
1
I CO SPAIN
1
600811111111
600811111111
ZBA/RTS SWEEP DEBIT
OS/10/2004 10,560.69 6019 11111111 XBS
TOTAL 10,560.69 # of Items: 1
TOTAL DEBITS
37,526.76 # of Items: 3
Bank ofAmerica, Miami SWIFTI# BOFAUS3M, US Dollar (USD) Accounts
1901999999 Demo
TOTAL CREDITS
TOTAL DEBITS
Detail Credits
Amount # of
Items
579,961.65 18
512,594.95 2
Last Updated: 10/06/2004 07:05 C
Value Date Amount Customer Bank
Reference Reference
INTERNATIONAL MONEY TRNSFR CR
10/06/2004 6,075.50 2999999/P001 040511111111
10/06/2004 38,462.70 2999999/P001 040511111111
10/06/2004 8,228.00 2999999/P001 040511111111
10/06/2004 14,600.50 2999999/P001 040511111111
TOTAL 67,366.70 # of Items: 4
LETTER OF CREDIT CR
OS/ 10/2004
OS/ 10/2004
OS/ 10/2004
OS/ 10/2004
OS/ 10/2004
OS/ 10/2004
OS/10/2004
OS/10/2004
OS/10/2004
OS/10/2004
53.00
6,075.50
8,228.00
14,600.50
38,462.70
75,230.00
76,230.00
7,775.00
46,980.00
1.00
69666
827071111111111
827071111111111
827071111111111
827071111111111
CCI51111111111
CCI51111111111
LC-EAH-1005-2004
LCI176-1111111
NO ACTNITY
1 ll 1 1 1 1 1 1 /070/I,C
111111111 /070/I.0
111111111 /070/I.0
111111111 /070/LC
111111111 /070/LC
111111111 /070/I..0
111111111/070/L�
111111111 /070/I,
111111111 /070/I.,C
TFMO1111G1111111
Report Created By: demo Jane Ferrero Page 8 Report Created: 10/07/2004 11:37 CST
Bank of America
• US GCIB - SGIR Test
Current Day Summary and Detail Report
OS/10/2004 30,165.00 NONREF 111111111 /070/LC
OS/ 10/2004 28,887.00 NONREF 111111111 /070/LC
TOTAL 332,687.70 # of Items: 12
MISCELLANEOUS CREDIT
OS/10/2004 176,775.59 002003/027 111111111/070/AC
TOTAL 176,775.59 # of Items: 1
INDIVIDUAL COLLECTION CREDIT
OS/10/2004 3,131.66 104777 11111111/070/CO
TOTAL 3,131.66 # of Items: 1
TOTAL CREDITS
579,961.65 # of Items: 18
Detail Debits
Value Date Amount Customer Bank
Reference Reference
INTERNATIONAL MONEY TRNSFR DR
OS/10/2004 512,593.95
TOTAL 512,593.95
�ETTER OF CREDIT DEBIT
5/ 10/2004 1.00
TOTAL 1.00
TOTf1L DEBITS
512,594.95
TOTAL Bank ofAmerica Accounts
CURRENT LEDGER BALANCE
OPENING AVAILABLE BALANCE
CURRENT AVAILABLE BALANCE
1 DAY FLOAT
2 OR MORE DAYS FLOAT
3 OR MORE DAYS FLOAT
TOTAL CREDITS
TOTAL DEBITS
TOTAL LOCKBOX DEPOSIT CR
TOTAL ACH CREDITS
TOTAL INCOMING MONEY TRNSFR CR
TOTAL SECURITY CREDITS
TOTAL DEPOSITED ITEMS RET CR
�OTAL ZBA CREDITS
OTAL COMMERCIAL DEPOSIT CR
TOTAL SWEEP CREDITS
TOTAL MISCELLANEOUS CREDITS
# of Items:
# of Items:
# of Items:
Amount
TRANSFERRED
1
NO ACTIVITY
1
2
# of Immediate
Items Availability
-406,248.48
350,264.92
-448,438.48
39,640.00
2,550.00
6.00
1,963,896.60
2,695,23330
0.00
10,519.70
1,200,072.63
0.00
0.00
0.00
0.00
173,342.62
0.00
30 1,200,072.63
6
0.00
1 1,200,072.63
0.00
UNAVAILABLE
TFM111111G111111
***US Dollar (USD)***
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Report Created By: demo Jane Ferrero Page 9 Report Created: 10/07/2004 11:37 CST
Bank of America
US GCIB - SGIR Test •
Current Day Summary and Detail Report
TOTAL ACH DEBITS 2,180,060.65
TOTAL CHECKS PAID DEBIT 2,577.70
TOTAL OUTGOING MONEY TRNSFR DR 0.00
TOTAL DEPOSITED ITEMS RET DR 0.00
TOTAL ZBA DEBITS 0.00
TOTAL INVESTMENTS PURCHASED DR 0.00
TOTAL MISCELLANEOUS DEBITS 0.00
TOTAL CREDITS
3,657,947.70 40 1,847,889.15 850,656.67 50,839.45
TOTAL DEBITS
4,389,284.40 16
TOTAL Euro (EUR) Accounts as of 10/06/2004
TOTAL CREDITS
TOTAL DEBITS
TOTAL CREDITS
Items
796,499.37 6
37,526.76 3
796,499.37 6
TOTAL DEBITS
37,526.76 3
TOTAL Swiss Franc (CHF) Accounts as of 10/06/2004
Description Amount
TOTAL CREDITS
TOTAL DEBITS
1,760,798.82
2,354,741.17
# of
Items
46
21
TOTAL CREDITS
1,760,798.82 46
TOTf1L DEBITS
2,354,741.17 21
TOTAL US Dollar (USD) Accounts as of 10/06/2004
Description Amount # of Immediate 1 Dav Float 2+ Dav Float
Items
CURRENT LEDGER BALANCE
OPENING AVAILABLE BALANCE
CURRENT AVAILABLE BALANCE
1 DAY FLOAT
2 OR MORE DAYS FLOAT
3 OR MORE DAYS FLOAT
TOTAL CREDITS
-406,248.48
350,264.92
-448,438.48
39,640.00
2,550.00
6.00
1,963,896.60
30
Availability
1,20Q072.63
•
0.00 0.00
Report Created By: demo Jane Ferrero Page 10 Report Created: 10/07/2004 11:37 CST
Bank of America
• US GCIB - SGIR Test
Current Day Summary and Detail Report
TOTAL DEBITS 2,695,233.30 6
TOTAL LOCKBOX DEPOSIT CR 0.00 0.00 0.00 0.00
TOTAL ACH CREDITS 10,519.70
TOTAL INCOMING MONEY TRNSFR CR 1,200,072.63 1 1,200,072.63 0.00 0.00
TOTAL SECURITY CREDITS 0.00
TOTAL DEPOSITED ITEMS RET CR 0.00
TOTAL ZBA CREDITS 0.00 0.00 0.00 0.00
TOTAL COMMERCIAL DEPOSIT CR 0.00
TOTAL SWEEP CREDITS 173,342.62
TOTAL MISCELLANEOUS CREDITS 0.00
TOTAL ACH DEBITS 2,180,060.65
TOTAL CHECKS PAID DEBIT 2,577.70
TOTAL OUTGOING MONEY TRNSFR DR 0.00
TOTAL DEPOSITED ITEMS RET DR 0.00
TOTAL ZBA DEBITS 0.00
TOTAL INVESTMENTS PURCHASED DR 0.00
TOTAL MISCELLANEOUS DEBITS 0.00
TOTAL CREDITS
• 3,657,947.70 40 1,847,889.15 850,656.67 50,839.45
TOTAL DEBITS
4,389,284.40 16
.
Report Created By: demo Jane Ferrero Page 11 Report Created: 10/07/2004 11:37 CST
•
As of 10/04/2004
Bank of America Accounts
Bank of America
US GCIB - SGIR Test
Previous Day Summary and Detail Report
Bank ofAmerica, Illinois ABA: 071000039, US Dollar (USD) Accounts
0004119118 Demo IL IDS Acct Last Updated: 10/OS/2004 14:19 CST
Detail Credits
Amount Customer Bank Immediate 1 Day Float 2+ Day Float
Reference Reference Availability
PREAUTHOWZED ACH CREDIT
9,721.11 0000000000 42731788896 9,721.11 0.00 0.00
4,163.15 0000000000 42733083109 4,163.15 0.00 0.00
319.60 0000000000 42731790049 319.60 0.00 0.00
TOTAL 14,203.86 # of Items: 3 14,203.86
COMMERCIAL DEPOSIT CREDIT
39,717.58 0000000971 06230777777 0.00 0.00 39,717.58
7,246.40 0000000971 06230777777 0.00 589.84 6,656.56
62.42 0000000971 06230777777 62.42 0.00 0.00
TOTAL 47,026.40 # of Items: 3 62.42 589.84 46,374.14
�OCKBOX DEPOSIT CREDIT
2,304,159.12 8888888888 00050503417 188,659.22 1,994,294.03 121,205.87
1,519,754.74 8888888888 00051101600 93,15135 1,232,917.68 193,685.71
820,234.15 8888888888 00050902451 55,641.29 720,853.94 43,738.92
TOTAL 4,644,148.01 # of Items: 3 337,451.86 3,948,065.65 358,630.50
INCOMING MONEY TRANSFER CREDIT
324,179.09 0000000000 00370017136 324,179.09 0.00 0.00
169,125.63 0000000000 00370015342 169,125.63 0.00 0.00
TOTAL 493,304.72 # of Items: 2 493,304.72
DEP+ TRANSFER CREDIT
1,107,108.42 0000000000 00722009999 177,738.86 205,993.08 723,376.48
TOTAL 1,107,108.42 # of Items: 1 177,738.86 205,993.08 723,376.48
ZBA CREDIT
155,89734 8188888888 00722149967 3,719.79 129,062.42 23,115.13
96,514.60 8188888888 00001040921 96,514.60 0.00 0.00
TOTAL 252,411.94 # of Items: 2 100,23439 129,062.42 23,115.13
TOTAL CREDITS
6,558,203.35 # of Items: 14 1,122,996.11 4,283,710.99 1,151,496.25
Detail Debits
Amount
ITEM RETURN DEBIT
390.55
Customer
Reference
0000000000
Bank
Reference
04160017875
Immediate 1 Day Float 2+ Day Float
Availability
Report Created By: demo Jane Ferrero Page 1 Report Created: 10/07/2004 11:07 CST
Bank of America
US GCIB - SGIR Test
Previous Day Summary and Detail Report
TOTAL 390.55 # of Items:
0
ZBA DEBIT TRANSFER
6,442,221.75 8188888888 00722150967
96,514.60 8188888888 00001040921
TOTAL 6,538,736.35 # of Items: 2
MISCELLANEOUS DEBIT
19,076.45 3299999999 04510004922
TOTAL 19,076.45 # of Items: 1
TOTAL DEBITS
6,558,20335 # of Items:
4
Bank of America, Customer Connection ABA: 111000012, US Dollar (DSD) Accounts
1234567890 Demo NCC IDS Acct
OPENING LEDGER BALANCE
CLOSING LEDGER BALANCE
AVERAGE CLOSING LEDGER MTD
OPENING AVAILABLE BALANCE
COLLECTED/CLOSING AVAIL BAL
AVERAGE COLLECTED BALANCE MTD
MUTUAL FUND BALANCE
1 DAY FLOAT
FLOAT ADNSTMENT
2 OR MORE DAYS FLOAT
3 OR MORE DAYS FLOAT
4 DAY FLOAT
5 DAY FLOAT
6 DAY FLOAT
TOTAL CREDITS
TOTAL DEBITS
TOTAL CREDITS NOT DETAILED
TOTAL LOCKBOX DEPOSIT CR
TOTAL EDI TRANSACTION CREDITS
TOTAL ACH CREDITS
TOTAL PREAUTHORIZED PAYMENT CR
TOTAL OTHER CHECK DEPOSITS CR
TOTAL LOAN PROCEED CREDITS
TOTAL CASH LETTER CREDITS
TOTAL INCOMING MONEY TRNSFR CR
TOTALAUTOMATIC TRANSFER CR
TOTAL FX/INTERNATIONAL CREDITS
TOTAL LETTERS OF CREDIT CR
0.00
0.00
1,856.86
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
3,312,064.61
3,312,064.61
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Items
u
Last Updated: 10/OS/2004 14:13 CST
Availability
�
•
Report Created By: demo Jane Ferrero Page 2 Report Created: 10/07/2004 11:07 CST
Bank of America
� US GCIB - SGIR Test
Previous Day Summary and Detail Report
TOTAL SECURITY CREDITS
TOTAL BANKERS ACCEPTANCE CR
TOTAL DEPOSITED ITEMS RET CR
TOTAL REJECTED CREDITS
TOTAL ZBA CREDITS
TOTAL CONTROLLED DISBURSING CR
TOTAL ATM CREDITS
TOTAL COMMERCIAL DEPOSIT CR
TOTAL SWEEP CREDITS
TOTAL MISCELLANEOUS CREDITS
DEBITS NOT DETAILED
TOTAL DEBITS LESS RETURN ITEMS
TOTAL LOCKBOX DEBITS
TOTAL EDI TRANSACTION DEBITS
TOTAL ACH DEBITS
TOTAL CHECKS PAID DEBIT
TOTAL LOAN DEBITS
TOTAL CASH LETTER DEBITS
TOTAL OUTGOING MONEY TRNSFR DR
�OTAL AUTOMATIC TRANSFER DR
TOTAL FX/INTERNATIONAL DEBITS
TOTAL LETTERS OF CREDIT DR
TOTAL SECURITY DEBITS
TOTAL BANKERS ACCEPTANCE DR
TOTAL DEPOSITED ITEMS RET DR
TOTAL ZBA DEBITS
TOTAL CONTROLLED DISBURSING DR
TOTAL ATM DEBITS
TOTAL ARP DEBITS
TOTAL INVESTMENTS PURCHASED DR
TOTAL MISCELLANEOUS DEBITS
Detail Credits
Amount
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
3,312,064.61
0.00
0.00
0.00
0.00
0.00
0.00
30,688.93
0.00
0.00
25,875.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
3,255,500.68
0.00
Customer Bank Immediate 1 Day Float 2+ Day Float
Reference Reference Availability
SWEEP-PRINCIPAL & INTEREST CR
3,312,064.61 0000000000 09915000276 3,312,064.61 0.00 0.00
TOTAL 3,312,064.61 # of Items: 1 3,312,064.61
TOTAL CREDITS
• 3,312,064.61 # of Items: 1 3,312,064.61
Report Created By: demo Jane Ferrero Page 3 Report Created: 10/07/2004 11:07 CST
Detail Debits
Bank of America
US GCIB - SGIR Test
Previous Day Summary and Detail Report
•
Amount Customer Bank Immediate 1 Day Float 2+ Day Float
Reference Reference Availability
CHECKS PAID DEBIT
3,600.00
26,250.00
838.93
TOTAL 30,688.93
0000042922 09130896207
0000042966 06300344961
0000042986 09330725253
# of Items: 3
OUTGOING MONEY TRANSFER DEBIT
25,875.00 0000000000 00370085519
TOTAL 25,875.00 # of Items: 1
SWEEP-REPO OR EiJRO DEBIT
3,255,500.68 0000000000 09915100243
TOTAL 3,255,500.68 # of Items: 1
TOTfiL DEBITS
3,312,064.61 # of Items: 5
Bank ofAmerica, Texas ABA: 111000025, US Dollar (USD) Accounts
808080808080 Demo TX 1 Acct
Description Amount #t of
Items
CLOSING LEDGER BALANCE
OPENING AVAILABLE BALANCE
COLLECTED/CLOSING AVAIL BAL
1 DAY FLOAT
2 OR MORE DAYS FLOAT
TOTAL CREDITS
TOTAL DEBITS
Detail Credits
111,599.00
106,427.00
100,000.00
6,427.00
5,172.00
2,275,354.40
2,345,311.40
7
4
Last Updated: 10/OS/2004 10:30 CS11
Immediate 1 Day Float 2+ Day F7oat
Availability
2,247.75 331.00 150.00
Amount Customer Bank Immediate 1 Day Float 2+ Day Float
Reference Reference Availability
CORPORATE TRADE PAYMENT CREDIT
1,083,136.83 000000000000 902542735911673
47,196.58 000000000000 902542735911703
TOTAL 1,130,333.41 # of Items: 2
COMMERCIAL DEPOSIT CREDIT
2,728.75 000000000000 813009999999999 2,247.75 331.00 150.00
TOTAL 2,728.75 # of Items: 1 2,247.75 331.00 150.00
INCOMING MONEY TRANSFER CREDIT •
248,440.75 000000000000 903709300071943
TOTAL 248,440.75 # of Items: 1
Report Created By: demo Jane Ferrero Page 4 Report Created: 10/07/2004 11:07 CST
Bank of America
• US GCIB - SGIR Test
Previous Day Summary and Detail Report
ZBA CREDIT
48,648.70 000181818181 081309302000000
TOTAL 48,648.70 # of Items: 1
SWEEP-PRINCIPAL CREDIT
195,202.79 000000000000 931609300000617
TOTAL 195,202.79 # of Items: 1
TRADING SECURITIES CREDIT
650,000.00 000000000000 944409300000131
TOTAL 650,000.00 # of Items: 1
TOTAL CREDITS
2,275,354.40 # of Items: 7 2,247.75 331.00 150.00
Detail Debits
Amount Customer Bank Immediate 1 Day Float 2+ Day Float
Reference Reference Availability
CONTROLLED DISB FUNDING DEBIT
93,808.70 002333333333 940909300000050
2,142,291.11 002334444444 940909300000052
( 17,50435 002335555555 940909300000054
TOTAL 2,253,604.16 # of Items: 3
INDIV INVESTMENT PURCHASED DR
91,707.24
TOTAL 91,707.24 # of Items: 1
TOTAL DEBITS
2,345,311.40 # of Items: 4
909090909090 Demo TX 2 Acct Last Updated: 10/OS/2004 10:30 CST
Description Amount # of Immediate 1 Day Float 2+ Day Float
CLOSING LEDGER BALANCE
OPENING AVAILABLE BALANCE
COLLECTED/CLOSING AVAIL BAL
1 DAY FLOAT
2 OR MORE DAYS FLOAT
TOTAL CREDITS
TOTAL DEBITS
Detail Credits
Amount
UTHORIZED ACH CREDIT
2,904.75
620.79
211,499.70
211,485.70
211,450.70
35.00
14.00
9,017.12
635.66
Customer
Reference
Items
7
5
Bank
Reference
000000000000 902542735019089
000000000000 902542740145829
Availability
3,919.89
Immediate
Availability
32.00 2.00
1 Day F7oat 2+ Day Float
Report Created By: demo Jane Ferrero Page 5 Report Created: 10/07/2004 11:07 CST
Bank of America
US GCIB - SGIR Test
Previous Day Summary and Detail Report
231.50 000000000000 902542735876511
31.19 000000000000 902542735863004
TOTAL 3,788.23 # of Items: 4
COMMERCIAL DEPOSIT CREDIT
3,953.89 000000000000 813005959595959 3,919.89
745.00 000000000000 813005959595959
530.00 000000000000 813005959595959
TOTAL 5,228.89 # of Items: 3 3,919.89
TOTAL CREDITS
9,017.12 # of Items: 7 3,919.89
Detail Debits
32.00
32.00
32.00
•
2.00
2.00
2.00
Amount Customer Bank Immediate 1 Day Float 2+ Day F!
Reference Reference Availability
CHECKS PAID DEBIT
343.85
1936
65.87
141.72
64.86
000092001288 813009130890845
000092001296 813009030212011
000092001300 813009531215270
000092001301 813008730935944
000092001314 813009330721594
TOTAL 635.66 # of Items: 5
TOTAL DEBITS
635.66 # of Items: 5
TOTAL Bank ofAmerica, Teacas ABA: 111000025
Description Amount # of
Items
CLOSING LEDGER BALANCE 323,098.70
OPENING AVAILABLE BALANCE 317,912.70
COLLECTED/CLOSING AVAIL BAL 311,450.70
1 DAY FLOAT 6,462.00
2 OR MORE DAYS FLOAT 5,186.00
TOTAL CREDITS 2,284,371.52 14
TOTAL DEBITS 2,345,947.06 9
TOTAL CREDITS
2,284,371.52 14
TOTf1L DEBITS
2,345,947.06 9
Bank of America, Geneva SWIFT# BOFACH2X, Swiss Franc (CHF) Accounts
601444444444 Demo Geneva Acct
***US Dollar (USD)***
Immediate 1 Day Float 7
Availability
6,167.64
6,167.64
Last
363.00
363.00
152.00
152.00
Report Created By: demo Jane Ferrero Page 6 Report Created: 10/07/2004 11:07 CST
Bank of America
• US GCIB - SGIR Test
Previous Day Summary and Detail Report
Description Amount # of
Items
OPENING LEDGER BALANCE
CLOSING LEDGER BALANCE
COLLECTED/CLOSING AVAIL BAL
TOTAL CREDITS
TOTAL DEBITS
1 DAY AVAIL BALANCE 10/OS/2004
2 DAY AVAIL BALANCE 10/06/2004
3 DAY AVAIL BALANCE 10/07/2004
4 DAY AVAIL BALANCE 10/08/2004
5 DAY AVAIL BALANCE 10/09/2004
Detail Credits
1,905,212.23
1,329,736.53
1,329,736.53
1,790,798.82
11,780,426.17
-4,841,044.79
-7,607,503.10
-7,607,503.10
-7,607,503.10
-8,084,415.12
47
67
Value Date Amount Customer Bank
Reference Reference
ACH INCOMING RECEIPT
10/O1/2004 600.00
10/O 1/2004 500.00
10/O 1/2004 500.00
�10/O1 /2004 410.00
10/O 1/2004 300.00
10/O 1/2004 300.00
10/O1/2004 300.00
10/O 1/2004 300.00
10/O1/2004 250.00
10/O1/2004 200.00
10/O1/2004 200.00
10/O1/2004 150.00
10/O 1 /2004 150.00
10/O1/2004 150.00
10/O 1/2004 150.00
10/O 1/2004 150.00
10/O1/2004 150.00
10/03/2004 1,500.00
10/03/2004 1,200.00
10/03/2004 500.00
10/03/2004 400.00
10/03/2004 300.00
10/03/2004 300.00
10/03/2004 300.00
10/03/2004 300.00
10/03/2004 150.00
10/03/2004 I50.00
-0/03/2004 150.00
10,010.00
LOCAL CURRENCY WIRE RECEIPT
# of Items:
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TR.ANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
TRANSFER
28
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS111111I1
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AOS11111111
Report Created By: demo Jane Fercero Page 7 Report Created: 10/07/2004 11:07 CST
Bank of America
US GCIB - SGIR Test
Previous Day Summary and Detail Report
�
10/04/2004 20,000.00 601411111111 6014AQS 11111111
10/04/2004 30,400.00 601411111111 6014AQS 11111111
10/04/2004 5,000.00 601411111111 6014AQS 11111111
10/04/2004 2,500.00 601411111111 6014AQS 11111111
10/04/2004 22,500.00 601411111111 6014AQS 11111111
10/04/2004 18,687.00 6014ll 111111 6014AQS 11111111
10/04/2004 18,372.00 1411111//600 SWI 6014AQS11111111
10/04/2004 1,017,623.89 NONREF 6014AQS 11111111
10/04/2004 417,057.60 NONREF 6014AQS 11111111
10/04/2004 32,334.72 NONREF 6014AQS 11111111
10/04/2004 26,249.00 ' NONREF 6014AQS11111111
10/04/2004 17,263.86 NONREF 6014AQS 11111111
10/04/2004 13,932.10 NONREF 6014AQS 11111111
10/04/2004 4,837.96 NONREF 6014AQS 11111111
10/04/2004 3,705.02 NONREF 6014AQS 11111111
10/04/2004 3,674.40 NONREF 6014AQS 11111111
10/04/2004 26,651.27 TRANSFER 6014AQS 11 I 11111
TOTAL 1,680,788.82 # of Items: 17
MISCELLANEOUS CREDIT
10/04/2004 70,000.00 601411111111 6014AQS 11111111
TOTAL 70,000.00 # of Items: 1 �
TOTf1L CREDITS
1,760,798.82 # of Items: 46
Detail Debits
Value Date Amount Customer Bank
Reference Reference
LOCAL CUR WIRE PAYMNT ITEMISED
10/04/2004
10/04/2004
10/04/2004
10/04/2004
10/04/2004
10/04/2004
10/04/2004
10/04/2004
10/04/2004
10/04/2004
10/04/2004
10/04/2004
10/04/2004
10/04/2004
10/04/2004
10/04/2004
10/04/2004
10/04/2004
10/04/2004
10,689.70
92,833.50
1,008,806.72
9,120.00
24,996.70
19,152.00
1,915.20
4,316.80
3,770.08
860.84
8,733.01
20,000.00
20,145.14
2,857.60
6,080.00
21,889.20
4,500.00
38,759.48
1,017,623.89
ACFA188888
FXD0008277777
LSWA999
RFTT6466666
RFTT6466666
RFTT6466666
RFTT6466666
RFTT6466666
RFTT6466666
RFTT6466666
RFTT6466666
RFTT6466666
RFTT6466666
RFTT6466666
RFTT6466666
RFTT6466666
RMTT6466666
RSTT6466666
SWCAllllll
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS 11111111 •
6014AQS11111111
6014AQS11111111
Report Created By: demo Jane Ferrero Page 8 Report Created: 10/07/2004 11:07 CST
�
Bank of America
US GCIB - SGIR Test
Previous Day Summary and Detail Report
TOTAL 2,317,049.86 # of Items:
INTERNATIONAL TRANSFER PAYMENT
19
10/04/2004 7,024.83 TFTT6466666 6014AQS 11111111
10/04/2004 5,019.04 TFTT6466666 6014AQS 11111111
10/04/2004 2,209.17 TFTT6466666 6014AQS 11111111
10/04/2004 4,971.62 TGTT6466666 6014AQS 11111111
TOTAL 19,224.66 # of Items: 4
TOTAL DEBITS
2,336,274.52 # of Items: 23
FORECAST TRANS�4CTIONS
Forecast - Detail Credits
Value Date Amount Customer Bank
Reference Reference
MISCELLANEOUS CREDIT
10/OS/2004 30,000.00 601411111111 6014AQS 11111111
TOTAL 30,000.00 # of Items: 1
Forecast - TOTAL CREDITS
30,000.00 # of Items: 1
Forecast - Detail Debits
Value Date Amount Customer Bank
Reference Reference
LOCAL CUR WIRE PAYMNT ITEMISED
10/OS/2004
10/OS/2004
10/OS/2004
10/OS/2004
10/OS/2004
10/05/2004
10/OS/2004
10/OS/2004
10/OS/2004
10/OS/2004
10/OS/2004
10/OS/2004
10/OS/2004
10/OS/2004
10/OS/2004
10/06/2004
10/06/2004
10/06/2004
�0/06/2004
0/06/2004
10/06/2004
10/06/2004
2,847,360.17
134,521.88
3,201.45
11,281.30
5,793.10
10,000.00
51,637.87
10,419.26
82,311.16
10,802.00
97,976.17
600.00
11,761.23
26,730.07
2,849,126.16
6,11134
835,564.18
15,310.00
6,277.10
9,277.86
10,90235
8,573.60
LSWA999
RFTT6466666
RFTT6466666
RFTT6466666
RFTT6466666
RFTT6466666
RFTT6466666
RFT"T6466666
RFTT6466666
RFTT6466666
RSTT6466666
RSTT6466666
RSTT6466666
RSTT6466666
SWCAllllll
ACFAllllll
LSWA999
RFT"T6466666
RFTT6466666
RFTT6466666
RFTT6466666
RFTT6466666
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
6014AQS11111111
Report Created By: demo Jane Ferrero Page 9 Report Created: 10/07/2004 11:07 CST
Bank of America
US GCIB - SGIR Test
Previous Day Summary and Detail Report
•
10/06/2004 950,179.63 RFTT6466666 6014AQS06240032
10/06/2004 6,511.00 RFTT6466666 6014AQS 11111111
10/06/2004 8,482.52 RFTT6466666 6014AQS 11111111
10/06/2004 4,929.82 RFTT6466666 6014AQS 11111111
10/06/2004 42,726.10 RFTT6466666 6014AQS 11111111
10/06/2004 9,032.90 RFTT6466666 6014AQS 11111111
10/06/2004 840,579.63 S WCA 111111 6014AQS 11111111
10/06/2004 4,345.28 TFTT6466666 6014AQS 11111111
10/09/2004 259,879.62 LSWA999 6014AQS 11111111
10/09/2004 68,836.57 RFTT6466666 6014AQS 11111111
10/09/2004 2,781.90 RFTT6466666 6014AQS 11111111
10/09/2004 15,455.00 RFTT6466666 6014AQS 11111111
10/09/2004 6,572.79 RFTT6466666 6014AQS 11111111
10/09/2004 5,150.82 RFTT6466666 6014AQS 11111111
10/09/2004 4,000.00 RFTT6466666 6014AQS 1 I 111111
10/09/2004 114,235.32 SWCA11111 6014AQS 11111111
TOTAL 9,389,237.15 # of Items: 38
INTERNATIONAL TRANSFER PAYMENT
10/OS/2004 30,036.31 RFTT6466666 6014AQS 11111111
10/OS/2004 3,581.66 TFTT6466666 6014AQS 11111 I 11
10/OS/2004 8,135.04 TFTT6466666 6014AQS 11111111
10/OS/2004 2,755.99 TGTT6466666 6014AQS 11111111 •
10/05/2004 2,750.50 TGTT6466666 6014AQS 11111111
10/06/2004 7,655.00 TGTT6466666 6014AQS 11111111
TOTAL 54,914.50 # of Items: 6
Forecast - TOTAL DEBITS
9,444,151.65 # of Items: 44
Bank ofAmerica, London SWIFT# BOFAGB22, Euro (EUR) Accounts
600888888888 Demo London Acct
OPENING LEDGER BALANCE
CLOSING LEDGER BALANCE
COLLECTED/CLOSING AVAIL BAL
TOTAL CREDITS
TOTAL DEBITS
I DAY AVAIL BALANCE 10/OS/2004
2 DAY AVAIL BALANCE 10/06/2004
3 DAY AVAIL BALANCE 10/07/2004
4 DAY AVAIL BALANCE 10/08/2004
5 DAY AVAIL BALANCE 10/09/2004
Detail Credits
Value Date Amount
Amount
-748,644.95
29,624.01
45,090.74
820,795.72
42,526.76
29,624.01
29,624.01
29,624.01
29,624.01
29,624.01
# of
Items
6
4
Customer
Reference
Last Updated: 1
Bank
Reference
Report Created By: demo Jane Ferrero Page 10 Report Created: 10/07/2004 11:07 CST
•
LOCAL CURRENCY WIRE RECEIPT
Bank of America
US GCIB - SGIR Test
Previous Day Summary and Detail Report
10/04/2004 1,037.56 600811111111 6008AQS 11111111
10/04/2004 9,160.87 600811111111 6008AQS 11111111
TOTAL 10,198.43 # of Items: 2
INTERNATIONAL TRANSFER CREDIT
10/04/2004 783,082.81 600811111111 6008AQS 11111111
10/04/2004 26,023.92 TRANSFER 6008AQS 11111111
10/04/2004 1,442.00 TRANSFER 6008AQS 11111111
10/04/2004 48.56 TR.ANSFER 6008AQS 11111111
TOTAL 810,597.29 # of Items: 4
TOTAL CREDITS
820,795.72 # of Items: 6
Detail Debits
Value Date Amount Customer Bank
Reference Reference
LOCAL CUR WIRE PAYMNT ITEMISED
10/04/2004 5,000.00 INTERCO 6008AQS 11111111
TOTAL 5,000.00 # of Items: 1
�NTERNATIONAL TRANSFER PAYMENT
10/04/2004 21,966.07 I CO SPAIN 6008AQS11111111
10/04/2004 5,000.00 INTERCO 6008AQS 11111111
TOTAL 26,966.07 # of Items: 2
ZBA/RTS SWEEP DEBIT
10/04/2004 10,560.69 6019 1111111111 6008XBS 11111111
TOTAL 10,560.69 # of Items: 1
TOTAL DEBITS
42,526.76 # of Items: 4
Bank ofAmerica, Miami SWIF7Y# BOFAiIS3M, US Dollar (USD) Accounts
1901999999 Demo Miami Acct
OPENING LEDGER BALANCE
CLOSING LEDGER BALANCE
COLLECTED/CLOSING AVAIL BAL
TOTAL CREDITS
TOTAL DEBITS
Detail Credits
Date
LETTER OF CREDIT CR
10/04/2004
Amount
53.00
0.00
0.00
0.00
512,594.95
512,594.95
Items
Customer
Reference
69666
Last Updated: 10/OS/2004 07:19 CST
Bank
Reference
002987123/070/LC
Report Created By: demo Jane Ferrero Page 11 Report Created: 10/07/2004 11:07 CST
Bank of America
US GCIB - SGIR Test
Previous Day Summary and Detail Report
�
10/04/2004 6,075.50 82707111111111 ll 1 1 1 1 1 1 1 1 /070/LC
10/04/2004 8,228.00 8270711111111111 11111111 /070/LC
10/04/2004 14,600.50 8270711111111111 11111111 /070/I.,C
10/04/2004 38,462.70 8270711111111111 11111111/070/LC
10/04/2004 75,230.00 CCI51111111111 111111111 /070/LC
10/04/2004 76,230.00 CCI51111111111 111111111/070/L,C
10/04/2004 7,775.00 LC-EAH-1005-2004 111111111 /070/LC
10/04/2004 46,980.00 LCI176-1111111 111111111/070/LC
10/04/2004 1.00 NO ACTIVITY TFMO 1111 G 1111111
10/04/2004 30,165.00 NONREF 111111111 /070/LC
10/04/2004 28,887.00 NONREF 111111111 /070/LC
TOTAL 332,687.70 # of (tems: 12
MISCELLANEOUS CREDIT
10/04/2004 176,775.59 002003/027
TOTAL 176,775.59 # of Items: 1
111111111 /070/AC
INDIVIDUAL COLLECTION CREDIT
10/04/2004 3,131.66 104777 111111111 /070/CO
TOTAL 3,131.66 # of Items: 1
TOT,4L CREDITS
512,594.95 # of Items: 14 �
Detail Debits
Value Date Amount Customer Bank
Reference Reference
INTERNATIONAL MONEY TRNSFR DR
10/04/2004 512,593.95 TRANSFERRED UNAVAILABLE
TOTAL 512,593.95 # of Items: 1
LETTER OF CREDIT DEBIT
10/04/2004 1.00 NO ACTIVITY TFM 111111 G 111111
TOTAL 1.00 # of Items: 1
TOTAL DEBITS
512,594.95 # of Items: 2
TOTAL Bank oi'America Accounts
OPENING LEDGER BALANCE
CLOSING LEDGER BALANCE
AVERAGE CLOSING LEDGER MTD
OPENING AVAILABLE BALANCE
COLLECTED/CLOSING AVAIL BAL
AVERAGE COLLECTED BALANCE MTD
MUTUAL FUND BALANCE
1 DAY FLOAT
FLOAT ADNSTMENT
Amount
0.00
323,098.70
1,856.86
317,912.70
311,450.70
0.00
0.00
6,462.00
0.00
# of Immediate
Items Availability
***US Dollar (USD)***
F7oat
•
Report Created By: demo Jane Ferrero Page 12 Report Created: 10/07/2004 11:07 CST
Bank of America
• US GCIB - SGIR Test
Previous Day Summary and Detail Report
2 OR MORE DAYS FLOAT
3 OR MORE DAYS FLOAT
4 DAY FLOAT
5 DAY FLOAT
6 DAY FLOAT
TOTAL CREDITS
TOTAL DEBITS
TOTAL CREDITS NOT DETAILED
TOTAL LOCKBOX DEPOSIT CR
TOTAL EDI TRANSACTION CREDITS
TOTAL ACH CREDITS
TOTAL PREAUTHORIZED PAYMENT CR
TOTAL OTHER CHECK DEPOSITS CR
TOTAL LOAN PROCEED CREDITS
TOTAL CASH LETTER CREDITS
TOTAL INCOMING MONEY TRNSFR CR
TOTAL AUTOMATIC TRANSFER CR
TOTAL FX/INTERNATIONAL CREDITS
TOTAL LETTERS OF CREDIT CR
�OTAL SECURITY CREDITS
TOTAL BANKERS ACCEPTANCE CR
TOTAL DEPOSITED ITEMS RET CR
TOTAL REJECTED CREDITS
TOTAL ZBA CREDITS
TOTAL CONTROLLED DISBURSING CR
TOTAL ATM CREDITS
TOTAL COMMERCIAL DEPOSIT CR
TOTAL SWEEP CREDITS
TOTAL MISCELLANEOUS CREDITS
DEBITS NOT DETAILED
TOTAL DEBITS LESS RETURN ITEMS
TOTAL LOCKBOX DEBITS
TOTAL EDI TRANSACTION DEBITS
TOTAL ACH DEBITS
TOTAL CHECKS PAID DEBIT
TOTAL LOAN DEBITS
TOTAL CASH LETTER DEBITS
TOTAL OUTGOING MONEY TRNSFR DR
TOTAL AUTOMATIC TRANSFER DR
TOTAL FX/INTERNATIONAL DEBITS
�OTAL LETTERS OF CREDIT DR
TOTAL SECURITY DEBITS
TOTAL BANKERS ACCEPTANCE DR
5,186.00
0.00
0.00
0.00
0.00
6,109,031.08 14
6,170,606.62 9
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
3,312,064.61
0.00
0.00
0.00
0.00
0.00
0.00
30,688.93
0.00
0.00
25,875.00
0.00
0.00
0.00
0.00
0.00
6,167.64 363.00 152.00
Report Created By: demo Jane Ferrero Page 13 Report Created: 10/07/2004 11:07 CST
TOTAL DEPOSITED ITEMS RET DR
TOTAL ZBA DEBITS
TOTAL CONTROLLED DISBURSING DR
TOTALATM DEBITS
TOTAL ARP DEBITS
TOTAL INVESTMENTS PURCHASED DR
TOTAL MISCELLANEOUS DEBITS
Bank of America
US GCIB - SGIR Test
Previous Day Summary and Detail Report
0.00
0.00
0.00
0.00
0.00
3,255,500.68
0.00
CJ
TOTAL CREDITS
12,667,234.43 43 4,441,228.36 4,284,073.99 1,151,648.25
TOTAL DEBITS
12,728,809.97 20
TOTAL Euro (EUR) Accounts as of IO/04/2004
Description
OPENING LEDGER BALANCE
CLOSING LEDGER BALANCE
COLLECTED/CLOSING AVAIL BAL
TOTAL CREDITS
TOTAL DEBITS
1 DAY AVAIL BALANCE
2 DAY AVAIL BALANCE
3 DAY AVAIL BALANCE
4 DAY AVAIL BALANCE
5 DAY AVAIL BALANCE
-748,644.95
29,624.01
45,090.74
820,795.72
42,526.76
29,624.01
29,624.01
29,624.01
29,624A 1
29,624.01
Items
6
4
TOTfiL CREDITS
820,795.72 6
TOTAL DEBITS
TOTAL Swiss Franc (CHF) Accounts as of IO/04/2004
Description Ami
OPENING LEDGER BALANCE
CLOSING LEDGER BALANCE
COLLECTED/CLOSING AVAIL BAL
TOTAL CREDITS
TOTAL DEBITS
1 DAY AVAIL BALANCE
2 DAY AVAIL BALANCE
3 DAY AVAIL BALANCE
4 DAY AVAIL BALANCE
42,526.76
1,905,212.23
1,329,736.53
1,329,736.53
1,790,798.82
11,780,426.17
-4,841,044.79
-7,607,503.10
-7,607,503.10
-7,607,503.10
4
Items
47
67
•
�
Report Created By: demo Jane Ferrero Page 14 Report Created: 10/07/2004 11:07 CST
Bank of America
• US GCIB - SGIR Test
Previous Day Summary and Detail Report
5 DAY AVAIL BALANCE
-8,084,415.12
TOTAL CREDITS
1,760,798.82 46
TOTAL DEBITS
2,336,274.52 23
Forecast - TOTAL CREDITS
30,000.00 1
Forecast - TOTAL DEBITS
9,444,151.65 44
TOTAL iIS Dollar (USD) Accounts as of IO/04/2004
OPENING LEDGER BALANCE
CLOSING LEDGER BALANCE
AVERAGE CLOSING LEDGER MTD
OPENING AVAILABLE BALANCE
�OLLECTED/CLOSING AVAIL BAL
AVERAGE COLLECTED BALANCE MTD
MUTUAL FUND BALANCE
1 DAY FLOAT
FLOAT ADNSTMENT
2 OR MORE DAYS FLOAT
3 OR MORE DAYS FLOAT
4 DAY FLOAT
5 DAY FLOAT
6 DAY FLOAT
TOTAL CREDITS
TOTAL DEBITS
TOTAL CREDITS NOT DETAILED
TOTAL LOCKBOX DEPOSIT CR
TOTAL EDI TRANSACTION CREDITS
TOTAL ACH CREDITS
TOTAL PREAUTHORIZED PAYMENT CR
TOTAL OTHER CHECK DEPOSITS CR
TOTAL LOAN PROCEED CREDITS
TOTAL CASH LETTER CREDITS
TOTAL INCOMING MONEY TRNSFR CR
�OTAL AUTOMATIC TRANSFER CR
TOTAL FX/INTERNATIONAL CREDITS
TOTAL LETTERS OF CREDIT CR
0.00
323,098.70
1,856.86
317,912.70
311,450.70
0.00
0.00
6,462.00
0.00
5,186.00
0.00
0.00
0.00
0.00
6,109,031.08
6,17Q606.62
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Items
14
9
Availability
6,167.64 363.00 152.00
Report Created By: demo Jane Ferrero Page 15 Report Created: 10/07/2004 11:07 CST
TOTAL SECURITY CREDITS
TOTAL BANKERS ACCEPTANCE CR
TOTAL DEPOSITED ITEMS RET CR
TOTAL REJECTED CREDITS
TOTAL ZBA CREDITS
TOTAL CONTROLLED DISBURSING GR
TOTAL ATM CREDITS
TOTAL COMMERCIAL DEPOSIT CR
TOTAL SWEEP CREDITS
TOTAL MISCELLANEOUS CREDITS
DEBITS NOT DETAILED
TOTAL DEBITS LESS RETURN ITEMS
TOTAL LOCKBOX DEBITS
TOTAL EDI TRANSACTION DEBITS
TOTAL ACH DEBITS
TOTAL CHECKS PAID DEBIT
TOTAL LOAN DEBITS
TOTAL CASH LETTER DEBITS
TOTAL OUTGOING MONEY TRNSFR DR
TOTAL AUTOMATIC TRANSFER DR
TOTAL FX/INTERNATIONAL DEBITS
TOTAL LETTERS OF CREDIT DR
TOTAL SECURITY DEBITS
TOTAL BANKERS ACCEPTANCE DR
TOTAL DEPOSITED ITEMS RET DR
TOTAL ZBA DEBITS
TOTAL CONTROLLED DISBURSING DR
TOTAL ATM DEBITS
TOTAL ARP DEBITS
TOTAL INVESTMENTS PURCHASED DR
TOTAL MISCELLANEOUS DEBITS
Bank of America
US GCIB - SGIR Test
Previous Day Summary and Detail Report
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
3,312,064.61
0.00
0.00
0.00
0.00
0.00
0.00
30,688.93
0.00
0.00
25,875.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
3,255,500.68
0.00
u
•
TOTAL CREDITS
12,667,234.43 43 4,441,228.36 4,284,073.99 1,151,648.25
TOTAL DEBITS
12,728,809.97 20
•
Report Created By: demo Jane Ferrero Page 16 Report Created: 10/07/2004 11:07 CST
•
R3562 BANK QF r�MERZCA, N.A.
Test Company
123 Testing Rd.
Charlotte, NC 11111
ACCaUNT 3d[J[�iFsER:
sE�rri.Er�rrr n��
PAGE 3
ACH ACTIVITY SUFIFL�RY
000000000123456789
a3fi2/zPO2
THIS REFpRT D�ET'AILS AI,L FiCTIVITY THAT RELATES �C] .�C'H
TRF.NS�sCTZ4NS THeiT WEKE DRiGINATED aN YOUR HEH,�L.F.
III. ITEM� RETURNED -
THI3 REPi]RT LI`.�„PS "PHE RE3TJRN ITEMS PROCESSED T4DAY. THEY WILL
BS REFLECTE� QId T(?DAYS SETTLEMF�]T.
---�-------------------------�------�------�----------------------y-------°---
FILE REFERE[10E EFFECTIVE DATE COMPANY N�ME ENTRY DESCRIP!'ICN
12345687901 02�03-08 TestCompany PAYROLL
__---__�----------------------------------------------------------°----------�_
R8T[,f12td TRAYdSIT- ACC(}T}PtT' NT�iBER/
REASQPI TC F,hfpUNT ZNDIVIDUr'�L NAMEf ID kOiJ'TING REFERF.NCE P]UN[BER
...,.,...,..�_.--�----------------------�----�-------'---'----'--" ___.---'__.,.__„
� R�p3 23
•
.00 Smith, John 111111111 123456789
12345 (123456789)
R03 -Nd ACCT/C�.I�10T LQC,�TE -
04 CRELrIT'� AICmfBER OP CREDITB: p
NUMBER dF CREDIT PRENQTES; 1
THE RETURNS LISTED AB�DVE WERE DEBITED/�CkEDITED 1�L} YpUR ACC�pTlf]T:
TCYL'AL CitEDIT AM4UHT: . Q@
TflTI,L DEBIT AMOUNT: .QQ
�
�
i
BankofAmerica ��I Higher Standards
2004 Annual Report
BankofAmerica ��� Higher Standards
Portrait of a Bank
BANK OF AMERICA SERVES INDIVIDUALS, SVIALL BUSINESSES, LARGE CO:�IPANIES, PUBLIC- AND PRIVATE-SECTOR.
institutions and nonprofits through four major lines of business (details on pages 28-29). Bank of America
is the nation's largest consumer bank and the first to haue a truly national retail franchise, with full-service
banking in 29 states and the District of Columbia. Bank of America is also the nation's largest small business
bank and the number one financial institution providing domestic and global cash management services. In
addition, Bank of America operates one of the largest private banks in the United States, the third-largest
bank-owned brokerage and one of the world's largest wealth management businesses. A leading financial
partner for corporate America, Bank of America has captured the largest share of middle-market and large
corporate relationships of any U.S. bank, including more than 95% of the Fortune 500. In 2004, Bank of America
was the world's second most profitable banking institution and the world's fifth most profitable company.
•
•
.
\ J
�
.
BankofAmerica ��� Higher Standards
Contents
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Chairman's Letter to Shareholders . . . . . . . . . . . . . . . . . . . . 5
Portrait of Leadership and Commitment . . . . . . . . . . . . . . . 9
Portrait of a Consumer Bank . . . . . . . . . . . . . . . . . . . . . . . 12
Portrait of a Small Business Bank . . . . . . . . . . . . . . . . . . . 16
Portrait of a Global Business and
Investment Bank ................................. 19
Portrait of a Personal Banker and
investment Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Portrait of a Neighborhood Bank . . . . . . . . . . . . . . . . . . . . 24
Four Business Lines Partner to Deliver the Whole Bank ... 28
Bank of America Earns Record $14.1 Billion in 2004 ..... 30
Financial Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Executive Officers and Directors . . . . . . . . . . . . . . . . . . . . 151
Corporatelnformation ............................ 152
Financial Highlights
(Dollars in millions, except per share information)
Yea.r Ended Dea�mbvr 31
For the year 2004 2003
Revenue* $ 49,610 $ 38,557
Net income 14,143 10,810
Shareholder value added 5,983 5,621
Earnings per common share 3.76 3.63
Diluted earnings per common share 3.69 3.57
Dividends paid per common share 1.70 1.44
Return on average assets 1.35% 1.44%
Return on average common
shareholders' equity 16.83 % 21.99 %
Efficiency ratio' 54.48 % 52.27 %
Average common shares issued
and outstanding (in millions) 3,759 2,973
At year end
Total assets $1,110,457 $719,483
Total loans and leases 521,837 371,463
Total deposits 618,570 414,113
Total shareholders' equity 99,645 47,980
Book value per common share 24.56 16.63
Market price per share of
common stock 46.99 40.22
Common shares issued and
outstanding (in millions) 4,047 2,882
In 2005, Bank of America renamed its business segments to
better reflect their current reach. Only the names haee been
changed; the entities that comprise each business segment
are the same. This annual report uses the new names in
reporting on these business segments' activities for 2004.
The new name and former name of each business segment
follows: Global Consumer and Small Bueiness Banking was
called Consumer and Small Business Banking; Global
Business and Financial Services was called Commercial
Banking; Global Capital Markets and Investment Banking
was called Global Corporate and Investment Banking; and
Global Wealth and Investment Management was called
Wealth and Investment Management.
2004 Revenue*
($ in millions)
Global Capital
Markets and
Investment - "
$`
Global Business
and Financial
Services
s�.�zz
Global Wealt
ind Investme
�anagement
?5,918
All Other
$1, 064`
Global Consumer and
Small Business Banking
$26,857
2004 Net Income
($ in millions)
Global Business
and Financial Services
$2,833
Global
Market
znvestment
S�
Global wealt
and Investme
Management
34
All ocr
$i,zzA�*
Global Consumer and
Small Business Banki
$6,548
*Fully taxable-equivalent basis
**All Other consists primarily of Latin America,
Equity Investments, noninterest income and
expense amounts associated with the asset and
liability management process, and the results of
certain businesses that are being liquidated.
BANK OF AMERICA 2004 3
•
�
�
r
�
•
4 BANK OF AMERICA 2004
"Our associates are working with teammates across the
company to create new opportunities to deliver
the full power of Bank of America to our customers:'
KENNETH D. LEWIS
CHAIRMAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT
�
To our shareholders:
�vo great tasks defined your company's efforts in 2004. First, we accelerated the execution of our organic growth
strategy, creating value for shareholders by building and e�anding millions of customer and client relationships
across the country. Second, we acquired and began to integrate the operations of F1eetBoston Financial Corporation,
adding more than 6 million customers and greatly increasing our opportunities for value creation and future growth
in a single stroke.
Some observers outside the company saw strategic conflict or a kind of corporate ambivalence in these two
tasks. We do not.
In fact, we view our acquisition of Fleet as tightly connected to our ongoing commitment to organic growth. We
said from the moment our two companies came together that our goal was not just to reduce costs, but to accelerate
organic growth in the Northeast. And that's just what we haee done.
At the same time, the momentum we ha�e been building for several years with our customers throughout the
company continued to grow In our retail banking operations, continuing improvements to products, services and the
banking center e�erience are driving customer "delight" and revenue to all-time highs. In our wholesale banking
businesses, bankers are working together to bring a full range of investment banking products and services to more of �
our clients than ever before. In our wealth management business, we are e�anding our financial advisor network and
increasing market share across the nation's best and fastest-growing wealth markets.
While our associates are working within their lines of business to build customer relationships, they also are
reaching out to work with teammates across the company to create new opportunities to deliver the full power of
Bank of America to our customers. For example, investment bankers are working with commercial bankers to
provide M&A advice to middle-market CEOs. Personal financial advisors are working with teanunates across the
bank to help us serve more of our consumer, small business, commercial and corporate customers with wealth
management services.
And last year, we launched an initiative called the Fixed Income Strategies Group that enables our Global
Capital Markets and Investment Banking business to distribute fixed-income products through Global Wealth and
Investment Management's network of financial advisors serving high-net-worth and retail clients, eapanding the suite of
product offerings auailable to our clients.
All this work is creating strong, consistent financial performance for our shareholders. You can read more
about how our associates are working together to grow the company starting on page 9 of this report.
Strategic vision, financial results
Our associates are pursuing our vision of a nationwide, universal bank for consumers and small businesses; a
full-service corporate and investment bank with global capabilities for our commercial and corporate clients; and a.
company that produces strong, consistent financial returns for its shareholders by delivering higher standards of service
for our customers every day. Our financial results are evidence that, in this pursuit, we are winning in the marketplace.
In 2004, Bank of Ainerica earned $14.1 billion, was the world's fifth most profitable company and, with a market
capitalization at year-end of $190 billion, was the second most highly valued financial services company in the world.
Our results exceeded our goals in most important financial ca,tegories, including diluted earnings per share, net
income, revenue and credit quality. I hope you will review our financial results in more detail in the financial summary
•
BANK OF AMERICA 2004 5
•
► 1
�J
•
$38.6
$35.1
'02
�oa
$49.6 $ 7.4 . :
$10.8
$9�211111
'02 '03 �04
($ in billions) ($ in billions)
Revenue (Fully taxable-equivalent basis) Net Income
on page 30 and in the Management Discussion & Analysis starting on page 33.
Our financial results in 2004 continued the strong returns we haue posted for our shareholders over the past
four years. In fact, we haue met or exceeded the rising expectations of Wall Street every quarter since the beginning
of 2001. From 2000 through 2004, our diluted earnings per share grew at a 10`�o annual rate, despite an economic
slowdown and market turbulence that derailed many competitors.
Our strong profit growth provides us multiple opportunities for capital deployment, which we pursue in three
broad categories: investments in existing lines of business, acquisitions of other companies and capital returned to
shareholders.
Our internal investments are tightly focused on areas of the company with strong long-term growth prospects.
Prominent examples include a$675 million investment beginning in 2005 in Global Capital Markets and Investment
Banking, where growth priorities include expanding capabilities in debt sales and trading, client management, our equity
platform, and our ability to serve clients' needs in Europe and Asia. In Global Wealth and Investment Management, we
continue to invest in sales and relationship management capacity. And in Global Consumer and Small Business
Banking, we're continuing to build out our banking center network as we move into new and fast-growing markets.
Our most visible acquisition last year was Fleet, but our acquisition of National Processing Corporation was a
great example of an effort to build scale and capabilities in an existing business. The addition of National Processing
to Bank of America Merchant Services is enabling us to offer more payments solutions to our customers. As payments
continue to shift from paper to plastic, the Merchant Services expansion has enabled us to strengthen our leadership
position in the payments business.
In deploying ca,pital, we haue complemented investments and acquisitions with an extremely shareholder-
friendly capital strategy. Since 1998, Bank of America has returned more than $65 billion in capital to shareholders
through a combination of increasing dividends and the repurchase of shares. Our dividend has grown at an annual
rate of 13% over the past 27 years, from $0.07 in 1977 to $1.70 today, and our current dividend yield of almost 4% is
among the most attractive in the industry.
Our strategic vision and iinancial results haue been rewarded in the marketplace. Over the past five years, our
shares ha�e appreciated faster than our peers', faster than the KBW Banks Index, faster than the S&P 500 and faster
than the Dow Jones Industrial Average. With an annualized total shareholder return (including stock price apprecia-
tion and dividends) of 18% from 1999 through 2004, Bank of America has been an extremely strong investment.
Growth in the Northeast
When we agreed to acquire Fleet, we believed that by bringing our successful retail model to the Fleet franchise we
could immediately start ta,king market share from our competitors, increasing customer satisfaction and generating
growth in accounts and revenue. And that's exactly what has happened.
6 BANK OF AMERICA 2004
$3.57
$2.95
'02 ' 03
$3.6!
'04
2
19.4$
2.0%
02 '03
16,8$
04
Eamings Per Common Share Retum on Average Common
(Diluted) Shareholde�s Equity
The results for our first nine months as one company, from Apri11 to December 31, confirm that we achieved
what we set out to do.
For example, net checking account growth in the Northeast increased from about 35,000 in 2003 to about
200,000 in 2004, and savings account growth registered strong gains as well. Not only are customers giving us a vote
of confidence with their purchase decisions, they're also telling us their satisfaction is growing, which bodes well for
future growth, Between June and December, customers in the Northeast who rated their experience in the banking
centers a 9 or a 10 on a 10-point scale increased from 51% to 61%.
We ha�e been extremely pleased with our early results, and these results have been gaining in strenb h since
we launched the Bank of America brand across the Northeast between August and December of last year. Even so,
we believe our greatest growth potential in the Northeast lies before us, not behind us. Even given our strong results
so far, our market penetration and share of wallet in Northeast markets remains low relative to potential business
opportunity. This is especially true in Global Wealth and Investment Management, where we see significa,nt opportuni-
ties to grow by ca,pturing more of our existing customers' wealth planning business.
The merger transition process itself has been, without qualification, the smoothest and fastest I ha�e seen in
my career. From the be� nning, we planned and executed the transition and all associated projects with strict
adherence to a disciplined Six Sigma approach, improving processes, driving down costs and enhancing quality and
productivity along the way.
We continue to face significant transition challenges and opportunities in the Northeast in 2005. We will meet
those challenges and seize those opportunities with the same energy, enthusiasm and intensity that led to our success
in 2004, and drive toward ever-higher growth goals throughout the Northeast for the future.
Smart growth
To generate strong, consistent, sustainable organic growth in financial services, achieving excellence in sales and
service is half the battle. The other half is developing the art and science of risk and reward management as a core
competency and competitive advantage.
Today, your company is developing the skills and tools that enable us to grow by taking the right risks, and by
getting paid appropriately for the risks we take. We are continuing to build a risk and reward management structure
and culture of shared responsibility, in which every associate—from front-line bankers to risk managers to auditors—
is accountable for managing risks to help the business grow.
This structure is important in helping us manage credit risk, but we also apply it to a broad view of risk, including
market risks and operational risks related to technology, systems, events, or legal, compliance and reputation issues.
We believe industry-leading risk management means playing good offense as well as good defense. At the
beginning of this letter, for example, I mentioned a partnership through which we distribute fixed-income
BANK OF AMERICA 2004 7
u
•
•
•
products originated by Global Capital Markets and Investment Banking to the bank's high-net-worth and retail
clients through our network of financial advisors. This partnership wouldn't work without a strong culture of
shared accountability, effective governance controls, and the active participation of Risk partners and the Audit
group in the business.
The key message that our associates are embracing is that managing risk and reward is not about a�oiding
risk. It's about taking calculated risks in pursuit of growth. Effecting a shift in our culture that encourages every
associate to understand, anticipate and manage the full range of potential risks and rewards in their area—whether
relating to a credit score, a market or interest rate fluctuation, a marketing opportunity or a regulatory issue—is a
fundamental part of our strategy for growth.
Leadership, past and future
Your company is in business for many reasons.
We provide the financial capital that creates economic opportunity for individual families, for businesses, for
the communities we serve, and for the global economy as a whole. As teammates, we help one another grow and
succeed, personally and professionally. And, of course, all our work is aimed at generating strong, consistent and
sustainable growth in financial returns for our shareholders.
Playing a key role in leading your company to achieve these strategic and financial goals for the past 18 years
has been our chief financial officer and vice chairman, Jim Hance, who retired from the company at the end of January.
Jim has been one of the key architects of our company for the last two decades, and has been a major ambassador for
our company on Wall Street and a major force within Bank of America driving for better results for all of our
constituencies. I could not haue asked for a better partner during my time as chief executive.
• Stepping into the role of chief financial officer is Marc Oken, who had served the company as principal finance
executive since 1989. Marc has a sharp financial mind and a strong, confident leadership style that will serve your
company well in his new role.
Also retiring from the company is Chad Gifford, our chairman and my partner in the Bank of America-Fleet
merger that brought Bank of America into New England and the Northeast. Chad is a tremendous leader who
directed the growth and success of BankBoston and Fleet over the past 38 years. Chad remains on our board of direc-
tors, and I look forward to his continued advice and counsel.
Finally, we haue two departures from our board this spring. Donald Guinn, chairman emeritus of Paciiic Telesis
Group, will retire from the board of directors at this year's Annual Meeting of Shareholders. Don has been a valued
director and a strong voice on our board since 1998, and has chaired our audit committee for the past six years. His
leadership will be missed. And Steve McMillan, chairman of Sara Lee Corporation, has resigned from our board. I
appreciate all Steve has done for Bank of America during his time as a director.
In closing, Pd like to thank all our directors for their guidance during what has been a year of great progress
and success. As we continue our work to deliver ever-higher standards of service and performance for our customers,
our shareholders and our communities, I look forward to all we'll accomplish together.
As always, I welcome your thoughts and suggestions.
�
� � � �� �
KENNETH D. LEWIS
CHAIRMAN, CHIEF EXECUTIVE OFFICER ,�ND PRESIDENT
MARCH 1, 2005
8 BANK OF AMERICA 2004
C�
Portrait of Leadership and Commitment
Customer focus and process discipline
produce breakthrough results.
THE KEY TO BANK OF AMERICA'S SUCCESSFUL EXECUTION OF ITS GROWTH STRATEGY IS CREATING CUSTOMER SATISFACTION.
The company achieves growth, CEO Ken Lewis says, "by satisfying so many customers so completely that they bring
us more of their business and recommend us to their neighbors, friends and family."
Lewis adds, "To attain that level of satisfaction, and attract, retain and expand customer relationships, we know
we ha�e to focus the energy and resources of the company on the basic work processes that drive every customer
experience:' It also is essential for all the bank's diverse businesses and centers of expertise to be able to work together
effectively to ensure that the right resources, products and services are a�ailable everywhere to every customer.
The focus of the bank's leaders and every associate, then, is clear: Consistent, enthusiastic execution and
teamwork produce customer satisfaction, which drives revenue growth.
Bank of America conducts its business around the clock, serving some 33 nullion households and more than
3 million businesses coast to coast and throughout the world, interacting with customers inore than 400 times every
second. We're there wherever and whenever the customer needs us: making an online transfer in the middle of the
night for a worried parent who needs to get money to a child at college; efficiently underwriting and marketing a multi-
billion-dollar bond issue to finance plant and equipment for a Fortune 1000 company; loaning on inventory to get a
small business over a temporary cash flow crisis; making an affordable mortgage available to a young family to finance �
their first home; making it easy for recent innnigrants to send money back to family in their old country; providing
investment advice so a hardworking couple in their 30s can retire in their 50s; helping a family transfer wealth from
one generation to the ne�. This—and much more—is what Bank of America does every minute of every day.
In a business this big and complex, "nothing can be left to chance," says Milton Jones, the company's quality
and productivity executive,
To deliver consistent, high-quality service, Bank of America has undertaken a pioneering effort to apply Six
Sigma, process improvement discipline to virtually every facet of the company's operations. Six Sigma is a sophistica,ted
set of fact-based tools and techniques that allows associates to identify the key drivers of a business process and
determine what should be changed in order to achieve the greatest possible improvement.
Since leadership made Six Sigma an integral part of the company's culture in 2001, the resulting process
improvements haue contributed to increases in revenue growth, operating efficiency and—perhaps most impor-
tantly—customer delight, which has increased 25%. The company considers customers "delighted" when they rate us
9 or 10 on a 10-point scale. Research shows that delighted customers are far more likely to stay with the company and
recommend us to others. Equally important, delighting customers is simply the right way to do business.
SiY Sigma puts the customer at the center of the company's thinking, so associates are viewing the world from the
outside in, designing processes that ma,ke a meaningful difference to customers. It's changed the way individuals approach
their jobs, and it's raised the confidence and enthusiasm of associates, who can clearly see their efforts bearing fruit.
In addition, an integrated business planning process ties each individuaPs performance plan to the company's
strategic objectives so that everybody is on the same team. The resulting teamwork, crossing traditional organizational
boundaries, enables Bank of America to deliver the full spectrum of the company's broad capabilities to all its customers.
This annual report, Portrait of a Bank, shows how Bank of America's leaders and associates are putting the
bank's strategy into practice on behalf of customers to create value for shareholders.
•
BANK OF AMERICA 2004 9
u
�
•
Portrait of a Management Philosophy
J. STEELE ALPHIN
GLOBAL PERSONNEL EXECUTIVE
"Associates at every
level are committed to our
vision of making Bank
of America the world's most
admired company."
GREGORY L. CURL
GLOBAL CORPORATE PLANNING
AND STRATEGY EXECUTIVE
`Bank of America's diversity,
capital strength and profitability
�ive it an advantage in
developing new ways to grow
for our shareholders."
10 BANK OF AMERICA 2004
CATHERINE P. BESSANT
GLOBAL MARKETING EXECUTIVE
"Our strong brand is a significant
competitive advantage, and.
in building it, everything matters.
The substance of our people, culture,
process and presence uniquely
set us apart."
ALVARO G. DE MOLINA
PRESIDENT, GLOBAL CAPITAL MARHETS
AND INVESTMENT BANKING
"We are using our competitive
edge as a universal bank to work
together to deliver all of the
company's resources to clients and
drive revenue for shareholders."
(More on page 19)
AMY WOODS BRINKLEY
GLOBAL RISK EXECUTIVE
"With higher standards
comes shared accountability.
We have hardwired values and
ethics into the character,
the very DNA, of our coinpany."
BARBARA J. DESOER
GLOBAL TECHNOLOGY, SERVICE
AND FULFILLMENT EXECUTIVE
"Really understanding what
our customers want is essential
to creating a consistently
outstanding experience for
them across all of our channels."
MILTON H. JONES, JR.
GLOBAL QUALITY AND PRODUCTIVITY EXECUTIVE
"Our focus on quality and
Six Sigma tools in our leadership
and customer interactions helps
make us a stronger, more
profitable company."
MARC D. OKEN
CHIEF FINANCIAL OFFICER
"Our goal is to produce
consistent, attractive
earnings growth at high
rates of profitability for our
shareholders."
LIAM E. McGEE
PRESIDENT, GLOBAL CONSUMER AND
SMALL BUSINESS BANKING
"The key to growth and customer
delight is emotionally connecting
with customers and delivering
a consistent, familiar experience
throughout the franchise:'
(More on page 12)
H. JAY SARLES
VICE CHAIRMAN AND SPECIAL
ADVISOR TO THE CEO
"When Bank of America
and Fleet merged, our goals were
to retain customers and
increase deposits and loans, and
we achieved those goals."
BRIAN T. MOYNIHAN
PRESIDENT, GLOBAL WEALTH
AND INVESTMENT MANAGEMENT
"Everything we do is
designed to help our clients achieve
their financial boals through
strong, long-ternl relationships
based on mutual trust."
(More on page 21)
R. EU('xENE TAYLOR
PRESIDENT, GLOBAL BUSINESS AND
FINANCIAL SERVICES
"With our unparalleled
resources, products and industr,y
expertise, we can do more for our
clients—and do it better—
than an,yone else."
(More on page 19)
BANK OF AMERICA 2004 11
•
�
�
•
�
�
Portrait of a Consumer Bank
Convenience, process excellence
and consistent service standards drive growth.
1.3
�.�
'02 '03
Checki
OF AMERICA HAS BUILT A NATIONAL FRANCHISE ON A SCALE
comparable with the nation's leading retailers—an achievement unique in America,n banking.
The benefits for U.S. customers are dramatic. For the first time, they can count
'04
ng
26*
21�
0.64
(O.Z6��02 '03 '04
Savings
(Net new accounts in millions)
*includes Fleet
Growth of net new checking
accounts and net new
savings accounts
on a consistent experience and easy access to their hometown bank virtually anywhere they live, work, play and
travel. A Boston family that vacations in New York and Florida, visits relatives in Dallas and St. Louis, or has
business connections in Los Angeles or Seattle finds Bank of America right there—in person, online or via
telephone or ATM.
Along with this convenience, Bank of America raised the stakes for service quality beginning in early 2002.
We dropped the less rigorous industry practice of ineasuring auerage customer satisfaction and began reporting
against the tougher standard of "highly satisfied" or "delighted" customers—those who rate their experience as
a 9 or 10 on a 10-point scale. By year-end 2004, 71% of customers said they were highly satisfied with their banking
center experience.
With the addition of the Fleet franchise early in 2004, Bank of America, is now a�ture in all four densely
populated corners of the United States, including New York's Times Square, pictured at right, as well as in the fastest-
growing markets in between—in all, 29 sta,tes and the District of Columbia. Seventy-six percent of the U.S. population lives
in our geographic footprint, including the vast majority of multicultural residents who drive U.S. population growth:
93% of Hispanic households, 86% of Asian households and 77% of African-American households.
Beyond these obvious geographic and cultural advanta,ges, our 33 million customer households enjoy the speed
and convenience of Bank of America's leading online banking and electronic bill-pay services; a voice-recognition
telephone system that balances easy self-service options with quick access to highly trained telephone bankers; and
the largest bank-owned ATM network in the nation.
Through these multiple channels, Bank of America provides a broad and innovative range of services, including
banking center access to residential mortgages, consumer investment and retirement services.
12 BANK OF AMERICA 2004
� '� f �
�+
, , , ...:�:-,T.,_. �•--:�� _..r.. . .. _ . .. �, _ .,.:n_;.,....
� + � �
�'� 1 'a�� �el�� �: �� � 1 � � r � � r� � �
:��� � � � — � �
*
� . ^�� � � �
� � � �
�• ,�, .,�
� _ �,r � - �,
, , �.
,�
,:��.-t'-... �
`�- __
�,�
_'�„�` � .
_ -`^`-�.._.
'�"'� , ° ,�,." -
: ,; :.� ,.���..
�'"`� _.
� � � �'
1
��
t �.
�; .
.,� �� � �.
-w.-�
'"�
£,
���w �� ..
� -�
�
� � � '��r'
r: ;
� � ��� ���� °-���: ,.
� '�-�t"y') �.
��.;:,,.
�� �^, �,."
I
p,
r-_,��1
•
�
u
In addition to nearly 6,000 banking centers and the nation's largest
bank-owned ATM network, Bank of America is the leading online bank,
with more than 12 million active online customers and nearly 6 million active bill-pay
customers—more than all other competitors combined. Customers make,
on auerage, 30 million electronic bill payments per month.
�
Consumer Banking product sales in 2004 increased 33% over the previous year, including 6.2 million
new credit card accounts, compared with 5.9 million the previous year.
The 11% retail deposit growth in 2004 was nearly double the national retail deposit growth rate of 5.6% in the same period.
Bank of America set a new standard in the remittance industry by eliminating SafeSend�
money-transfer fees for Chicago customers who send money to Mexico—the first step toward eliminating
those charges nationwide during 2005.
14 BANK OF AMERICA 2004
The density of our presence in the nation's diverse
urban regions creates the opportunity to provide financial
solutions to movers, home buyers and neighborhood
businesses, as well as newcomers to the United States
who confront language and cultural challenges. We are
a market leader, for example, with Hispanics, doing
business with 44% of U.S. Hispanic households. The
majority of new banking centers we opened over the past
two years serve Hispanic neighborhoods.
Along with serving consumers in many languages
and providing online, ATM and telephone banking services
in Spanish, we recruit talented people with numerous lan-
guage skills and cultural backgrounds. In 2004, nearly half
of all e�ernal hires in the consumer bank were bilingual.
The Fleet merger not only completed the bank's
geographic continuity but also set a standard unmatched
in two decades of tumultuous consolidation in U.S. bank-
6 million active bill-pay customers—more than all of
our competitors combined. They make, on auerage,
30 nullion electronic bill payments every month.
■ Our nearly 17,000 ATMs recorded more than 1.1 billion
transactions in 2004, including 175 million deposits.
■ Bank of America Telephone Banking handles 700
million ca11s annually. Customers responded positively
in 2004 to new voice-recognition technology, which
makes banking by phone faster, friendlier and more
flexible for customers who need specialized help.
Bank of America is also the nation's fastest-
growing major credit card company. The bank puts
credit cards at the core of its consumer business rather
than operating it as a stand-alone company, as many of
our competitors do. Credit cards are leading relationship
builders that pave the way for new banking relationships
with non-customers. During 2004, the bank sold 6.2
With the addition of F1eetBoston early in 2004, Bank of America is now
a fixture in the four densely populated corners of the
United States—and most of the fastest-growing markets in between.
ing. Associates across the Northeast grew the customer
base while taking on the complex challenges of transi-
tion, more than doubling auerage daily sales per seller in
2004 and gaining five times more net new checking
accounts than the previous year.
The record indicates that customers across the
country take full advantage of the convenience, range of
choices and combination of personal service and technol-
ogy tools Bank of America offers them:
■ Our nearly 6,000 banking centers host 600 million
customer visits annually. In 2004, Bank of America
tellers handled 1 billion over-the-counter transactions
for consumers and small business owners.
■ In 2004, the number of active online banking customers
grew 34% to more than 12 million, including 734,000
small business customers. These numbers include
million new credit card accounts, compared with 5.9
million the previous year (including Fleet).
Mortgage-related products play a similar
relationship-building role for Bank of America. In 2004,
Bank of America was the nation's number five reta,il
mortgage originator and the number two home equity
lender. The franchise of banking centers, combined with
Consumer Real Estate account executives and online
access, brings the mortgage application and preapproval
process closer to home for consumers and makes the
entire e�erience faster and easier than ever.
With superior products and services, associates
who really care and the unparalleled convenience of our
banking center, ATM, online and telephone banking
network, we can do more for customers than any other
financial institution.
BANK OF AMERICA 2004 15
•
L_I
�
u
Portrait of a Small Business Bank
Entrepreneurs choose Bank of America
for experience, skill and attention to their needs.
9,263
4,251
'02 '03
��,�sg�
'04
(Number of loans)
*includes Fleet
SBA Loan Growth
0 BANKING CENTER.S, BANK OF AMERICA IS LITERALLY A NEIGHBOR TO MILLIONS
of small businesses—the storefront boutiques, machine shops and corner grocery stores that provide basic services,
create jobs and contribute diversity and personality to communities across America.
• Bank of America is the leading small business bank in the diverse urban markets where smaller firms drive the
economy, grow two to three times faster than business overall, and create breakthrough opportunities for newcomers
to the United States. One in four U.S. consumers is a small business owner. This represents both a tremendous
opportunity and responsibility for Bank of America to provide a broad range of business services through banking
centers, online and telephone channels, and a new segment, Business Banking, where client managers can respond to
even the most complex financial needs.
•
These customers rely on our night drops, merchant tellers and face-to-face services on a daily basis. Many use
personal credit cards and home equity lines to manage operating e�enses. In addition, small business specialists in many
banking centers and business bankers are trained to connect with capabilities anywhere in Bank of America to provide
credit, deposit, transaction and investment services; credit and debit card services; ca,sh ma,nagement; payroll services—
even employee benefit plans.
Small business specialists and business bankers are able to provide guidance for every stage in the life of a
small business, along with the ca,pital to fuel growth. They can help arrange retirement and succession planning when
a mature business needs to change ownership. Additional services are auailable by phone from our specialized small
business call center and online through our small business Web site, which was ranked best in overall quality and ease
of use for three straight years by Gomez, Inc., a leading firm in tracking Internet performance.
Through our relationship approach, we also meet the personal needs of business owners, their families and
employees. Business owners ca,n leverage their personal and company banking relationships to get fauorable pricing.
In 2004, for the third consecutive year, Bank of America, was the nation's lea,ding Small Business Administration
(SBA) lender, providing more SBA loans to nunority and nonminority borrowers than an,y other lender by a significant
margin. Through our banking centers, we serve neighborhood firms of varying size and complexity, but most impor-
tant, we consider no business too small for our services. In 2004, our customers' small business loans ranged from
several thousand to tens of millions of dollars, and our auerage loan size was around $30,000.
16 BANK OF AMERICA 2004
Small business owners want to work with bankers who provide a
one-stop shop for a broad range of financial services and who also understand their
challenges well enough to help them plan and make critical decisions.
0
We are the nation's leading small business bank, serving more than 3 million small businesses
in our markets across 29 states and the District of Columbia, or nearly one in five.
More than 500 client managers provide one-on-one trusted advice to
nearly 200,000 businesses with more complex financial needs.
Established a new Client Development Group in 2004, a telephone-based team of client managers,
scheduled for enterprise-wide rollout in 2005.
Doubled the number of associates who are specially
trained to serve more than 2.5 million small businesses that use our banking centers.
BANK OF AMERICA 2004 17
•
•
C�
J
��
;.
t By breaking down the barriers
t - between traditional commercial
banking and investment banking,
we can offer the services of our
trading rooms—such as this
��. one in Charlotte, NC—to middle-
� market companies, like the
� large retailer pictured
' on page 20. ,.�`�
E;
;
� �.
,
`?a@ .� � e4 . t
C, '�k�i�, %' ��
af
�
b � �,� �
� � . ,_..,.„,
�' � . �g
� �� � a
��.. �....�.��.` �.
� �� �r�
�
�
�,�,
1 ' � ' � � Y , ��
I�
� � ;�
���, �',. ��,
t ; ,�
{
� I
�� � �
� � '�� I
� � �
��; s��
� • � � f '#
� � ��
� � i � � ��� n ,
i � � � �
, � r " ,' � { q;
� � �� � f� I'.
, r � r ',
--�, � ! � -'�' � I f
r a � k �..-�
r �� � i �
, � � __�- .
� � � �-
��� ��
��
. :
y . , : _.
.��, . �� �:�W.... � � ,�...
� .�
��
�
r� e
i
I
i
;.
�
�'.
�
�
�4
Portrait of a Global Business
and Investment Bank
Unlocking the power of the universal banking model
nF AMFR.TCA TS C1NR nF A VFRY �MAT,L (;R(1TiP f1F FTNAN( TAT, TNfiTTTT1TT(1N.0 WTTH THF. ARTT.iTV
to offer businesses of all sizes credit, deposit, treasury management and other traditional banking products and
services, plus all the services of a major investment bank. In this universal banking model, teams of consumer,
commercial and investment bankers work together to provide all clients, regardless of size, the right combination of
products and services to meet their needs.
By taking this innovative approach to how we deliver our e�ertise to corporate clients, we can greatly enhance
each client's experience and deepen each relationship. We are collaborating to create access to our capabffities that
is based on clients' financial and strategic needs, rather than their size. Some clients regularly use our array of
traditional and investment banking products and services. Others primarily use standard products, with occasional need
for more complex investment banking expertise. Smaller companies that are beginning to realize their potential through
strong revenue growth might need a trusted advisor to serve as a key strategic counselor and help craft business
development plans and financial strategies to support them.
By understanding these varying needs, we can pair clients with the right team of bankers to deliver unparalleled
service and financial solutions to meet their needs, We also ca,n expand our teams, bringing in experts in additional
product and service areas as client needs change. By bringing the right people to the table at the right time, we can
quickly and easily use the full breadth of our investment banking capabilities, our client and industry knowledge, and
our product expertise to provide clients with insightfizl solutions and sean�less access to the financial services they need.
We will be enhancing our sales and trading capabilities to provide our large institutional investor clients—from
hedge funds to insurance companies—with cutting-edge access to the products they need. And we continue to e�lore
ways to expand the use of our expertise to structure and distribute what we originate across the company to an
expanding investor client base.
We deliver our services through Global Business and Financial Services and Global Capital Markets and
Investment Banking, and we are now breaking down these walls to deliver the bank's entire platform to our clients.
Global Business and Financial Services is an industry leader, providing clients with deposit, credit, payments, cash
BANK OF AMERICA 2004 19
�
•
u
•
•
�
management and other traditional banking services.
We are the number one provider of treasury services to
companies of all sizes; the predominant U.S. middle-
market bank, serving one in five midsize companies; and
the leading bank-owned asset-based lender.
As a fully integrated corporate and investment
bank, Global Capital Markets and Investment Banking
provides large corporate clients with innovative capital-
raising, trading and advisory services; foreign exchange;
extensive derivatives; and other risk management
products, as well as traditional bank services. We are an
industry leader in loan syndications and the capital mar-
kets debt business, and we continue to gain momentum
in equity capital markets and M&A advisory services.
Our derivatives, risk management and foreign exchange
capabilities regularly rank number one in independent
client surveys.
Our unmatched capabilities and ease of doing
business mean added value for our clients. Working
together, we believe the possibilities are endless.
�
In 2004, Bank of America moved into double-digit market share for U.S. high yield underwriting, and was named U.S.
Leveraged Lease Loan House of the Year by International Financing Review.
Number one U.S. treasury services provider (top three globally), serving 90% of the U.S. Fortune 500.
Predominant U.S. middle-market bank, serving one in five midsize companies, and leading provider of financial
services to the commercial real estate industry and home builders.
20 BANK OF AMERICA 2004
Portrait of a Personal Banker
and Investment Advisor
Teamwork delivers powerful products and personalized
service to affluent clients.
iX, RAPIDLY CHANGING AND OFTEN UNCERTAIN-THOSE ARE THE CHARACTERISTICS OF THE FIIvTANCIAL
journey traueled every day by 18 million affluent Americans contending with their sauing and borrowing needs while
seeking to build and manage their wealth.
For help navigating this journey, these customers haue access to a variety of providers offering standard
financial planning, consumer banking products and/or investments. At Bank of America, we offer a ver,y different and
unique solution through Premier Banking & Investments, our organization focused entirely on serving the specific,
comprehensive needs of America's affluent individuals and families. In contrast to others, Premier Banking
& Investments delivers personal attention, trusted advice and guidance, plus integrated custom-tailored banking,
credit, investment and day-to-day transaction services to clients with less than $3 million in investable assets. Every
feature of this business is designed to reward clients for their relationship with Bank of America.
By filling the traditional gap between consumer banking and private financial services for the very wea.lthy,
Premier Banking & Investments is steadily gaining market share and building new and e�anded client relationships
in our country's largest and fastest-growing wealth markets. Premier Banking & Investments now has a coast-to-coast
network of nearly 4,000 client managers and financial advisors, including more than 1,800 skilled advisor teams
and 58 Wealth Centers in markets with the h'ighest concentration of affluent households and the strongest growth
potential. In these markets, where Bank of America already has more than twice the deposit share of its closest com-
petitor, Premier Banking & Investments is fast becoming the financial destination of choice for our 4.3 million affluent
households, which are broadening their existing deposit relationships to include other products and services.
Premier Banking & Investments begins with a closely integrated team—a skilled Prenuer Banking client
manager brings the banking expertise; a highly trained, experienced financial advisor froin our brokerage company,
Banc of America Investment Services, Inc., provides the investment planning skills. The Premier Banking &
Investments teams work on a dedicated, one-to-one basis with their clients.
The teams draw their strength from a product and service foundation that is unparalleled. On the banking
BANK OF AMERICA 2004 21
•
•
�
•
r�
��
•
By filling the traditional gap between consumer banking and
private financial services for the very wealthy,
Premier Banking & Investments is steadily gaining market
share and building new and e�anded client relationships in our
country's largest and fastest-growing wealth markets,
including Walnut Creek, California, above.
�
When qualified consumer banking customers join Premier Banking, their average balances grow by 9%.
Premier Banking revenue grew by 36% in 2004.
Total balances in Premier Banking & Investments (deposits, loans and client brokerage assets)
have increased from $98 billion in 2002 to $199 billion in 2004.
22 BANK OF AMERICA 2004
�
I$84
side, there is the geographic $71 help is needed, the Center
scope and deposit and credit staff procures it.
expertise of America's largest $48 $sl And if our customers'
consumer bank. For asset $43 $44 needs become more complex
growth and preservation, our s33 $28 over time, The Private Bank at
investment management areas $22 Bank of America will serve
provide a rich spectrum of tools them through its nationwide
and products, ranging from - oZ - os - 04 -oz - oa -04 - oz - 03 - 04 network of wealth manage-
brokerage services to trust and Deposits Loans Client Brokerage lYlerit EXp2PtS.
estate planning to investment Assets Premier Banking &
products offered through our es in billions) Investments plans to contin-
Client satisfaction has produced growth in
proprietary asset management deposits, loans and client brokerage asset balan�es�Owlrig in key markets
organlzatlon, COIUri1�Jla MB,ri- among Premier Banking & Investments clients. aCPOSS the country, particu-
agement Group, as well as larly in the Northeast—home
third-party providers. Premier Banking & Investments' to the nation's largest concentration of personal wealth
capabilities span the financial universe—from jumbo and to 400 new Premier Banking client managers.
"We are building upon America's most powerful consumer
banking franchise to deliver tailored, relationship-driven services that meet the �
specific needs of affluent clients nationwide. Customers are responding
with increased satisfaction and increased business:'
BRIAN T. MOYNIHAN, PRESIDENT,
GLOBAL WEALTH AND INVESTMEi�T �I:�nAGE�1ENT
mortgages through equity and fixed-income products With the "home-field advantage" of Bank of
to retirement accounts and wealth transfer strategies. America's scale and scope and a powerful, industry-
For daily banking transactions, Premier Banking & leading solution, Premier Banking & Investments is well
Investments delivers priority service positioned to propel business growth.
from its Premier Relationship Centers— The results are already impressive. The
backed up by the nation's largest network 606, oo� revenue from a consumer banking cus-
of banking centers and ATMs and the 4zs, o0o tomer grows more than 12% on average
nation's most extensive online banking 383, o0o during the year he or she becomes
capability. The Centers provide Premier a Premier Banking & Investments
clients immediate telephone contact with client, and client retention rates
specially trained banking professionals. increase significantly. The percentage of
Calls are answered in less than 20 clients who rank our service 9 or 10 on a
seconds on average, and most questions '0z "03 "04 10-point scale—our measure of client
(NUmber of client relationship )
and banking needs, such as funds �elight—is growing every year. In 2004,
transfers and CD rollovers, are responded Premier Banking & Investment�hree out of four clients with client
has seen dramatic growth
to during the initial call. If additional in its �iienc base. managers ranked our service 9 or 10.
•
BANK OF AMERICA 2004 23
•
�
•
Portrait of a Neighborhood Bank
Innovative enterprise-wide initiatives
are making a difference in our communities.
In 1998, Bank of America
made an unprecedented
commitment to lend or
invest at least $350 billion
in community development
over the next 10 years.
Significantly ahead of the
run rate to achieve that
goal, in 2004, we set a new
10-year goal of $750 billion,
beginning in 2005.
N PORTLAND, CONSTRUCTION BEGINS ON OREGON'S LARGEST PUBLIC HOUSING DEVELOPMENT TO
create 850 new units of affordable housing on the site of a blighted complex built for World War II defense
workers. In New York City, with the 2004 national elections in high gear, a world-famous square along Fifth
Avenue is transformed into Democracy Plaza, a unique celebration of America's democratic values. In cities
across the nation, nearly 800 Bank of America associates partner with CHOICES, a nonprofit organization
that challenges students to think about their futures, to teach 70,000 middle and high school students about
the importance of their personal and aca,demic decisions.
In the wake of devastating hurricanes in Florida and the unimaginable horrors of the tsunami in
southern Asia, Bank of America, pledges large grants, partners with relief agencies, mobilizes associates
and marshals its banking centers to collect public donations.
These efforts to improve neighborhoods and people's lives, while sharing Bank of America's
commitment to higher standards, are being replicated thousands of times across the bank's nationwide
footprint, driven by our 10-year commitment to lend or invest at least $750 billion in connnunity
development. F�om our signature initiative called Neighborhood Excellence to our new position as the "Off'icial
Bank of Baseball," we are creating programs that transforni our values into stronger, healthier communities.
Neighborhood Excellence, introduced in 30 communities in 2004, is Bank of America's sweeping
'04
— $a�o
I
— S28ss
'03 ,,,,- $230.8
'02 ,,,,' $163.3
'01 , � ,� $114.4
— $69.4
�oolllll
— $39.6
9911111 0
($ in billions)
program to focus a significant portion of philanthropic resources on the priori� needs of our neighborhoods.
Neighborhood Excellence recognizes, nurtures and rewards Local Heroes, Student Leaders and organizations that are
creating positive change in their communities.
In the first year of Neighborhood Excellence, we committed up to $500,000 in ea,ch of 30 key markets, including
new markets in the Northeast. With the help of committees of loca,l leaders in each market, we chose two Neighborhood
Builders—nonprofit organizations to which we will provide $200,000 each in funding, plus leadership training over the
course of two years. We also recognized five Local Heroes in each market who haae contributed to neighborhood
24 BANK OF AMERICA 2004
In 2004, Bank of America loaned and invested more than
$12.4 billion to create affordable new homes for families and individuals,
including the City View development in Orlando, Florida, above.
�
Through our volunteer network, Team Bank of America, 100,000 associates provided 700,000
volunteer hours to 3,500 nonprofit organizations within our communities. Because Bank of America allows
full-time associates to volunteer up to two hours per week of company time to such activities, many other associates
also made significant contributions of their time to meet community needs in 2004.
With one of the largest philanthropic budgets of any corporation in the nation, our charitable investments
in 2004 totaled $108 million. We have set a philanthropic goal of $1.5 billion over the next 10 years.
BANK OF AMERICA 2004 25
i
•
�
�
�
•
vitality, and five exemplary Student Leaders. The Local
Heroes were each granted $5,000 for an eligible
nonprofit of their choice. Student Leaders will receive
paid summer internships with local nonprofits and
mentoring from Bank of America leaders.
It's an example of how we leverage our resources
to benefit a broad range of stakeholders, increasing
neighborhood impact while clearly communicating the
values that make Bank of America the strong brand it is.
Going forward, we will expand Neighborhood Excellence
to new markets and continue to make charitable invest-
ments in community institutions that focus on a broad
range of health, education and cultural objectives.
In addition to philanthropy, Bank of America
brings an integrated program of community investments
to the people and places we serve.
In 2004 we became the first company ever to be
designated the Official Bank of Baseball. This unique
80 stadiums where we haue a market presence. Our
sponsorship of Little League Baseball—the largest youth
sports organization in the world, with 2.7 million
participants—includes on-site presence at state and
regional tournaments, the Little League World Series
and other promotional programs.
Consistent with our company's values and the
role we haue played in our nation's history, we launched
Democracy Plaza at Rockefeller Center in New York City
in the days leading up to the 2004 national election.
Focusing on the traditions of citizenship, democracy and
the electoral process, the exhibit served as the backdrop
for Election Day broadcasting on the NBC network,
providing public awareness of our support for the
communities, infrastructure, traditions and industries
that keep America strong.
Illustrating the broad scope of our ongoing
support for community access to cultural institutions, we
"We ha�e an ambitious goal:
to be the bank of choice in all of our neighborhoods.
Our capabilities, resources and commitment
are unmatched and enable us to strengthen and build
America's cities and communities:'
CATHERINE P. BESSANT,
GLOBAL MARKETING EXECUTIVE
relationship includes agreements with Major League,
Minor League and Little League Baseball, connecting
the bank with the nation's passion for this all-American
sport and e�ressing our shared belief in individual
performance, teamwork and higher standards, Our part-
nership with baseball gives us a deep connection with
each of our local markets, from the big league ballparks
to the sandlots where kids first learn the game.
Bank of America already sponsors nine Major
League Baseball clubs and 11 Minor League teams. Our
agreement with Minor League Baseball includes a`Bank
of America Day" to be held simultaneously in about
26 BANK OF AMERICA 2004
launched our seventh season of Museums On Us! � in the
Northeast, offering Bank of America customers free
adnnssion to 51 of the finest museums and cultural
venues in that region. Our customers can visit participat-
ing institutions simply by showing their ATM, debit or
credit card. Museums On Us! has attracted more
than 250,000 people to the finest museums and cultural
institutions over the last seven years. Our $12 million
investment strengthens the educational programming
of participating museums and helps expose families to
new forms of art and culture.
As a leader in the business of Community
In 2004, Bank of America became the first company ever to
be designated the Official Bank of Baseball—a unique
relationship with Major League, Minor League and Little League Baseball
that connects the bank with the nation's passion for the sport
and gives us deep connections in our local markets.
Development Banking, we help build stronger and
healthier neighborhoods in the low- and moderate-
income areas we serve. Part of our integrated approach
to meeting priority neighborhood needs includes
delivering specialized financial resources to build and
preserve affordable housing, and creating jobs to
transform underserved and long-neglected blocks into
vibrant communities.
Our 10-year commitment, beginning in 2005, to
lend and invest at least $750 billion for community revi-
talization across the United States is one of the largest in
the history of U.S. commercial banks. It expands on
previous pledges by Bank of America and Fleet, and
delivers more than $205 million in community develop-
ment activity in our neighborhoods every day.
Investments and lending in our cominunities will focus
on affordable housing and home ownership, small
business/small farm ownership, consumer loans and
economic development. Included in the goal is $25 billion
for lending programs for rural and Native American areas.
In all these ways and more, we are helpinb build
stronger, more vital communities—for the benefit of
local people, organizations, econonues and, ultimately,
our enterprise.
BANK OF AMERICA 2004 27
u
�
•
•
u
•
Four Business
Partner to Deliver the
$26.! $6.!
ss.�
$20.9
$4.7
$18.3
'02 '03 '04 '02 '03 '04
($ in billions)
Revenue* Net Income
$6
$4.5
$4.4
'02 '03 '04
si.s
$1.4
'02 '03
sa.
'04
($ in billions)
Revenue* Net Income
28 BANK OF AMERICA 2004
Lines
Whole Bank
Global Consumer and Small Business Banking
(Formerly Consumer and Small Business Banking)
Bank of America serves more consumers and small businesses in the United
States than any other bank, with nearly 6,000 banking centers and nearly
17,000 proprietary ATMs in 29 states plus the District of Columbia; an award-
winning online banking service with the most active users of any online bank
and more active online bill payers than all other bank competitors combined;
and a 24-hour telephone banking service that earns high ratings for customer
satisfaction. Positioned in the nation's wealthiest, fastest-growing and most
diverse markets, the bank serves 33 million households and more than 3
million small businesses. We are the nation's largest provider of checking
account services and the nation's number one debit card provider. Global
Consumer and Small Business banking includes the nation's fastest-growing
major credit card company, the number five provider of consumer first mortgages
and number two provider of home equity lines of credit.
Global Business and Financial Services
(Formerly Commercial Banking)
Global Business and Financial Services offers clients unrivaled market access,
flexibility and value from their banking relationships through a variety of
services, including Global Treasury Services, Middle Market Banking,
Commercial Real Estate Banking, Dealer Financial Services (auto, marine and
RV lending), Leasing and Business Capita,l (asset-based lending). Bank of
America is the predominant middle-market bank in the United States, providing
comprehensive financial solutions, including capital markets, investment
banking and traditional banking services. We also are the number one global
treasury services provider, the leading bank-owned asset-based lender and the
leading provider of financial services to commercial real estate developers,
homebuilders and commercial real estate firms. Effective January 1, 2005,
Bank of America will include the results of Latin America and Business
Banking (client-managed business accounts formerly included in Small
Business) in Global Business and Financial Services.
Global Capital Markets and Investment Banking
(Formerly Global Corporate and Investment Banking)
Global Capital Markets and Investment Banking is an integrated corporate and
investment bank that provides issuer clients with innovative, comprehensive
capital-raising solutions and advisory services, as well as traditional bank
deposit and loan products, cash management and payment services. Investor
clients are served by strong equity and debt research, sales and
trading capabilities. All clients beneiit from extensive derivative and other
risk-management products. Through offices in 35 countries, Global Capital
Markets and Investment Banking serves domestic and international corporations,
including most of the Fortune 1000; institutional investors; financial institutions;
and government entities. Many of the company's services to corporate and
institutional clients are provided through its U.S. and U.K. subsidiaries, Banc of
America Securities LLC and Banc of America Securities Limited.
Global Wealth and Investment Management
(Formerly Wealth and Investment Management)
Global Wealth and Investment Management delivers investment services shaped
by advice and guidance to more than 1.8 million individual and institutional
clients located across the United States and throughout the world. It includes
The Private Bank at Bank of America, which provides integrated credit, deposit,
investment and trust services to more high-net-worth clients than any other bank
in the United States, and Premier Banking, which delivers comprehensive
financial solutions shaped by personal advice to nearly 606,000 affluent client
relationships. It also includes the fast-growing Banc of America Investment
Services, Inc., brokerage with more than 2,100 financial advisors, and Columbia
Management Group, one of the world's largest asset managers and the provider
of proprietary asset management products to retail and institutional investors.
Global Wealth and Investment Management has $708.4 billion in client assets,
including $451.5 billion in assets under management, with total a�erage deposits
of $83 billion and auerage loans of $44 billion.
$8.3 $9.� $2.0
$B'2 $1.8
$1.6
'02 '03 '04 '02 '03 '04
($ in billions)
Revenue* Net Income
$5.9 $1.6
si.z
$4.0
$3.6 $0.9
'02 '03 '04 '02 '03 '04
($ in billions)
Revenue* Net Income
*Fully taxable-equivalent basis
BANK OF AMERICA 2004 29
CJ
�
u
•
•
�
•
Bank of America Earns Record
$14.1 Billion in 2004
Business momentum, Fleet merger drive 31% net income gain.
BANK OF AMERICA IN 2004 EARNED A RECORD $14.1 BILLION,
making the company the fifth most profitable in the world.
Earnings were up 31% from a year earlier, due to
the addition of F1eetBoston Financial Corporation, which
was acquired on April l, 2004, and the company's contin-
uing business momentum throughout the franchise.
Under purchase accounting rules, Fleet's impact prior to
April l, 2004, is not included in the financial results.
On a pro forma basis, if Fleet's previous results
were included, net income was up 12% for the year.
Diluted earnings per share of $3.69 were up from
$3,57 in 2003. Return on equity in 2004 was 16.8%.
Revenue
Fully taxable-equivalent revenue grew 29% to $49.6
billion from $38.6 billion in 2003.
Fully taxable-equivalent net interest income rose
34% to $29.5 billion. In addition to the impact of Fleet, the
increase was driven by the results of asset-liability man-
agement activities, higher consumer loan levels and
higher core deposit levels, partially offset by reductions
in large corporate and foreign loan portfolios as well as
lower trading-related contributions and mortgage ware-
house levels.
Noninterest income grew 22% to $20.1 billion,
driven by the impact of Fleet and the growth of card
30 BANK OF AMERICA 2004
income, service charges, investment and brokerage fees,
equity investment gains, trading account profits and
investment banking income. This was partially offset by
lower mortgage banking income.
Securities gains were $2.12 billion, compared to
$941 million a year ago.
Ffficiency
Noninterest e�ense grew 34% to $27 billion, driven by the
impact of Fleet, merger and restructuring costs, higher
personnel costs, revenue-related incentive compensation
and increased occupancy, marketing, and litigation-
related expense. The efficiency ratio was 54.5%.
Credit quality
All major commercial asset quality indicators showed
positive trends throughout the year. The credit card pro-
vision grew as a result of ca,rd portfolio growth, the return
of previously securitized loans to the balance sheet and
increases in nunimum payment requirements. Consumer
asset quality remained strong in all other categories.
Provision e�cpense was $2.77 billion in 2004, a 2%
decline from 2003 despite the addition of Fleet. Net
charge-offs totaled $3.11 billion, or 0,66% of loans and
leases, compared to $3.11 billion, or 0.87% of loans and
leases in 2003.
Nonperforming assets were 0.47% of total loans,
leases and foreclosed properties, or $2,46 billion, as of
December 31, 2004. This compared to 0.81%, or $3.02
billion, on December 31, 2003.
The allowance for loan and lease losses stood at
1.65% of loans and leases, or $8.63 billion, on December
31, 2004. This compared to 1.66%, or $6.16 billion, on
December 31, 2003, Criticized e�osure declined from
$12.7 billion or 5.9% of total utilized commercial e�osure
in 2003, to $10.2 billion or 3.4% in 2004.
Capital
Bank of America's capital position remained strong in
2004. Total shareholders' equity was $99.6 billion at
December 31, 2004, representing 9% of period-end assets
of $1.1 trillion. The Tier 1 capital ratio rose to 8.1% from
7.9%o at the end of 2003.
Business segments
Global Consumer and Small Business Banking earned
$6.55 billion. In addition to adding Fleet, this segment
achieved strong growth in checking and savings
accounts, which helped to drive double-digit growth in
deposit balances. Home equity and credit card loan
outstandings grew. Mortgage results were adversely
affected by higher interest rates, which significantly
reduced refinance volumes, and by adjustments to the
value of mortgage servicing rights.
Global Business and Financial Services earned
$2.83 billion. The main drivers of this segment's perform-
ance were significant improvements in credit quality,
which resulted in negative provision e�ense. Excluding
the impact of Fleet, loans grew modestly during the year
and deposits also rose. Treasury management fee growth
also contributed to higher net income.
Global Capital Markets and Investment Banking
earned $1.95 billion in 2004 and had negative provision
expense due to improved credit quality. Excluding the
impact of Fleet, investment banking income increased,
reflecting the company's continued buildout of that
platform, and trading-related revenue also rose.
Results were adversely impacted by the mutual fund
settlement.
Global Wealth and Investment Management
earned $1.58 billion. Excluding the addition of Fleet,
growth in assets under management and earnings was
driven by strong performance in the credit portfolios of
Premier Banking and The Private Bank and increased
market valuations in the asset inanagement portfolio.
Results were adversely impacted by the mutual fund
settlement.
BANK OF AMERICA 2004 31
•
�
•
•
I �
�
�
BankofAmerica ��� Higher Standards
Financial Review Contents
ManagemenYs Discussion and Analysis of Results
of Operations and Financial Condition . . . . . . . . . . . . . . 33
Statistical Financial Information . . . . . . . . . . . . . . . . . . . 84
Report of Management on Internal Control
Over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . 94
Report of Independent Registered Public
Accounting Firm ............................... 95
Consolidated Statement of Income . . . . . . . . . . . . . . . . 96
Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . 97
Consolidated Statement of Changes in
Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Consolidated Statement of Cash Flows . . . . . . . . . . . . . 99
Notes to Consolidated Financial Statements . . . . . . . . 100
Management's Discussion and Analysis
of Results of Operations and Financial Condition
Bank of America Corporation and Subsidiaries
This report contains certain statements ihat are forward-looking within
the meaning of the Private Securities Litigation Reform Act of 1995.
These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions that are difficult to
predict. Actual outcomes and results may ditfer materially from those
expressed in, or implied by, our forward-looking statements. Words such
as "expects," `anticipates," "believes," "estimates" and other similar
expressions or future or conditional verbs such as "will," "should,"
"would" and "could' are intended to identify such forward-looking
statements. Readers of the Annual Report of Bank of America
Corporation and its subsidiaries (the Corporation) should not rely solely
on the fonvard-looking statements and should consider all uncertainties
and risks throughout this report. The statements are representative
only as of the date they are made, and the Corporation undertakes no
obligation to update any fonvard-looking statement.
Possible events or factors that could cause results or performance
to differ materially from those expressed in our fonvard-looking statements
include the following: changes in general economic conditions and
economic conditions in the geographic regions and industries in which
ihe Corporation operates which may affect, among other things, the level
of nonperforming assets, charge-offs and provision expense; changes in
the interest rate environment which may reduce interest margins and
impact funding sources; changes in foreign exchange rates; adverse
movements and volatility in debt and equity capital markets; changes in
market rates and prices which may adversely impact the value of financial
products including securities, loans, deposits, debt and derivative �nancial
instruments, and other similar financial instruments; political conditions
and related actions by the United States abroad which may adversely
affect the Corporaiion's businesses and economic conditions as a whole;
liabilities resulting from litigation and regulatory investigations, including
costs, expenses, seitlements and judgments; changes in domestic or
foreign tax laws, rules and regulations as well as Internal Revenue
Service (IRS) or other governmental agencies' interpretations thereof,•
various monetary and fiscal policies and regulations, including those
determined by the Board of Governors of the Federal Reserve System
(FRB), the O�ce of the Comptroller of Currency, the Federal Deposit
Insurance Corporation and state regulators; competition with other local,
regional and international banks, thrifts, credit unions and oiher nonbank
financial institutions; ability to grow core businesses; ability to develop and
introduce new banking-related products, services and enhancements,
and gain market acceptance of such products; mergers and acquisitions
and their integration into the Corporation; decisions to downsize, sell or
close units or otherwise change the business mix of the Corporation; and
managemenYs ability to manage these and other risks.
The Corporation, headquartered in Charlotte, North Carolina, operates
in 29 states and the District of Columbia and has offices located in
43 foreign countries. The Corporation provides a diversified range of
banking and nonbanking financial services and products both
domestically and internationally through four business segments. In
order to more closely align with the scope of our businesses, we have
renamed each of our business segments. Consumer and Small
Business Banking has been renamed Global Consumer and Small
Business Banking, Commercial Banking is now called Global Business
and Financial Services, Global Corporate and Investment Banking is
now called Global Capital Markets and Investment Banking, and
Wealth and Investment Management has been renamed Global Wealth
and Investment Management.
At December 31, 2004, the Corporation had $1.1 trillion in
assets and approximately 176,000 full-time equivalent employees.
Notes to Consolidated Financial Statements referred to in
Management's Discussion and Analysis of Results of Operations and
Financial Condition are incorporated by reference into Management's
Discussion and Analysis of Results of Operations and Financial
Condition. Certain prior period amounts have been reclassified to
conform to current period presentation.
On April 1, 2004, we completed our merger with FleetBoston
Financial Corporation (FleetBoston) (the Merger) after obtaining final
shareholder and regulatory approvals. The Merger was accounted for
under the purchase method of accounting. Accordingly, results for
2004 included nine months of combined company results. Results
for 2003 and at December 31, 2003 excluded FleetBoston. For
informational and comparative purposes, certain tables have been
expanded to include a column entitled FleetBoston, April 1, 2004.
This column represents balances acquired from FleetBoston as of
April 1, 2004, including purchase accounting adjustments.
On October 15, 2004, we acquired 100 percent of National
Processing, Inc. (NPC), for $1.4 billion in cash, creating the second
largest merchant processor in the United States.
During the second quarter of 2004, our Board of Directors
(the Board) approved a 2-for-1 stock split in the form of a common
stock dividend and increased the quarterly cash dividend 12.5 percent
from $0.40 to $0.45 per post-split share. The common stock dividend
was effective August 27, 2004 to common shareholders of record on
August 6, 2004 and the cash dividend was effective September 24,
2004 to common shareholders of record on September 3, 2004. All
prior period common share and related per common share information
has been restated to reflect the 2-for-1 stock split.
BANK OF AMERICA 2004 33
•
•
�
•
•
•
Economic Overview
In 2004, U.S. economic perFormance was solid, creating a generally
healthy environment for banking, while global growth exceeded
expectations. In the U.S., real Gross Domestic Product (GDP) grew
rapidly, as the negative impact of higher oil prices was more than offset
by sound fundamentals and the FRB's accommodative monetary pol-
icy. Consumer spending continued to rise, while consumer credit qual-
ity remained healthy. Sustained gains in productivity contributed to
rising corporate profits and cash flows. Businesses rebuilt invento-
ries and increased capital spending, particularly for information pro-
cessing equipment and software. Although overall corporate loan
demand remained soft, corporate credit quality improved as the econ-
omy strengthened in the second half of the year. Employment grew
and the unemployment rate receded, although the pace of job cre-
ation was soft relative to GDP growth, reflecting business efforts to
constrain operating costs. Housing activity rose to historic levels.
Inflation rose modestly but stayed low relative to historic standards.
The FRB raised the federal funds rate target from one percent at mid-
year to 2.25 percent, but the increases were widely anticipated and
bond yields remained low, generating a flatter yield curve.
Performance Overview
For the second year in a row, we achieved record earnings. Net
Income totaled $14.1 billion, or $3.69 per diluted common share in
2004, 31 percent and three percent increases, respectively, from
$10.8 billion, or $3.57 per diluted common share in 2003.
Business Segment Total Revenue and Net Income
Total Revenue Net Income
(Dollars in millions) 2004 2003 2004 2003
Global Consumer and
Small Business Banking $ 26,857 $20,930 $ 6,548 $ 5,706
Global Business and
Financial Services 6,722 4,517 2,833 1,471
Global Capital Markets
and Investment Banking 9,049 8,334 1,950 1,794
Global Wealth and
Investment Management 5,918 4,030 1,584 1,234
AllOther 1,064 746 1,228 605
Total FfE basis�1� 49,610 38,557 14,143 10,810
FTE adjustment�1� (716) (643) - -
Total $48,894 $37,914 $14,143 510,810
(1) Total revenue for the segments and All Other is on a fully tasaDleequivalent (FfE) basis. For more
information on a FfE basis, see Supplemental Financial Data beginning on page 38.
34 BANK OF AMERICA 2004
Global Consumer and Small Business Banking
Net Income increased $842 million, or 15 percent, to $6.5 billion in
2004, including the $1.1 billion impact of the Merger. Driving this
increase was the $5.2 billion increase in Net Interest Income and a
$1.5 billion increase in Card Income. Partially offsetting this was the
$3.0 billion increase in Noninterest Expense, a$1.7 billion increase
in Provision for Credit Losses and a$1.5 billion decrease in
Mortgage Banking Income. The Provision for Credit Losses increased
$1.7 billion to $3.3 billion, including higher credit card net charge-offs
of $791 million, of which $320 million was attributed to the addition
of the FleetBoston credit card portfolio. For more information on
Global Consumer and Small Business Banking, see page 41.
Global Business and Financial Services
Net Income increased $1.4 billion, or 93 percent, to $2.8 billion for
2004 includingthe $824 million impact ofthe addition of FleetBoston.
Both average Loans and Leases, and Deposits grew significantly, with
increases of $36.3 billion, or 39 percent, and $21.6 billion, or 69 percent,
respectively. Impacting these increases were the $29.3 billion
increase in average Loans and Leases and the $17.6 billion increase
in average Deposits related to the addition of FleetBoston. Also driv-
ing the improved results was the $699 million decrease in Provision
for Credit Losses, driven by lower net charge-offs and the continued
credit quality improvement in the commercial portfolio. For more infor-
mation on Global Business and Financial Services, see page 45.
Global Capital Markets and Investment Banking
Net Income increased $156 million, or nine percent, to $2.0 billion in
2004. Contributing to the increase in Net Income was a reduction of
$762 million in the Provision for Credit Losses and increases in
Trading Account Profits and Investment Banking Income of $441 mil-
lion and $147 million, respectively. Notable improvements in credit
quality in the large corporate portfolio and a 71 percent reduction in
net charge-offs drove the $762 million decrease in Provision for
Credit Losses. Partially offsetting these increases were the $460 mil-
lion impact of charges taken for litigation matters in 2004, an
increase of $279 miliion of incentive compensation for market-based
activities and the $143 million impact of the charges taken for the
mutual fund matter. For more information on Global Capital Markets
and Investment Banking, see page 46.
Global Wealth and Investment Management
Net Income increased $350 million, or 28 percent, to $1.6 billion in
2004. The increase in Net Income was driven by the $253 million
impact of the addition of FleetBoston and growth in both average Loans
and Leases, and Deposits. Total assets under management increased
$154.8 billion, or 52 percent, to $451.5 billion at December 31, 2004,
due to the addition of $148.9 billion of FleetBoston assets under
management and increased market valuation partially offset by
outflows, primarily in money market products. For more information
on Global Wealth and Investment Management, see page 48.
All Other
Net Income increased $623 million, or 103 percent, to $1.2 billion in
2004. This increase was driven by a$1.1 billion increase in Gains on
Sales of Debt Securities. In addition, Total Revenue increased $318
million, or 43 percent, to $1.1 billion due to improvements in both
Latin America and Equity Investments. Partially offsetting these
increases was a$607 million increase in Noninterest Expense,
driven by $618 million of Merger and Restructuring Charges. For
more information on All Other, see page 49.
Financial Highlights
Net Interest Income
Net Interest Income on a FfE basis increased $7.4 billion to $29.5
billion in 2004. This increase was driven by the impact of the Merger,
higher asset and liability management (ALM) portfolio levels (prima-
rily consisting of securities and whole loan mortgages), the impact of
higher rates, growth in consumer loan levels (primarily credit card and
home equity) and higher core deposit funding levels. Partially offset-
ting these increases were reductions in the large corporate and for-
eign loan balances, lower trading-related contributions, lower
mortgage warehouse levels and the continued runoff of previously
exited consumer businesses. The net interest yield on a FfE basis
declined 14 basis points (bps) to 3.26 percent due to the negative
impact of increased trading-related balances, which have a lower yield
than other earning assets. For more information on Net Interest
Income on a FfE basis, see Table I on page 84.
Noninterest Income
Noninterest Income
(D011ars in millions) 2004 2003
Service charges $ 6,989 $ 5,618
Investment and brokerage services 3,627 2,371
Mortgage banking income 414 1,922
Investment banking income 1,886 1,736
Equity investment gains 861 215
Card income 4,588 3,052
Trading account profits 869 409
Other income 863 1,127
Total noninterest income $ 20,097 $16,450
Noninterest Income increased $3.6 billion to $20.1 billion in 2004,
due primarily to the addition of FleetBoston, which contributed
$3.8 billion of Noninterest Income.
• Service Charges grew $1.4 billion driven by organic account
growth and approximately $960 million from the addition of
FleetBoston customers.
• Investment and Brokerage Services increased $1.3 billion due
to approximately $1.1 billion related to the addition of the
FleetBoston business as well as market appreciation.
• Mortgage Banking Income decreased $1.5 billion caused by
lower production levels, a decrease in the gains on sales of
loans to the secondary market and writedowns of the value of
Mortgage Servicing Rights (MSRs).
• Investment Banking Income increased $150 million on
increased market share in a variety of products.
• Equity Investment Gains increased $646 million due to a$576
million increase in Principal Investing gains.
• Card Income increased $1.5 billion due to increased fees and
interchange income, including the $832 million impact from the
addition of the FleetBoston card portfolio.
• Trading Account Profits increased $460 million due to
increased customer activity.
• Other Income decreased $264 million due to the absence of
whole mortgage loan sale gains in 2004, partially offset by the
addition of FleetBoston.
For more information on Noninterest Income, see Business Segment
Operations beginning on page 40.
Gains on Sales of Debt Securities
Gains on Sales of Debt Securities in 2004 were $2.1 billion compared
to $941 million in 2003, as we continued to reposition the ALM port-
folio in response to interest rate fluctuations and to manage mortgage
prepayment risk. For more information on Gains on Sales of Debt
Securities, see Market Risk Management beginning on page 72.
Provision for Credit Losses
The Provision for Credit Losses decreased $70 million to $2.8 billion
in 2004 driven by lower commercial net charge-offs of $748 million
and continued improvements in credit quality in the commerciai loan
portfolio. Offsetting these decreases were increases in the Provision
for Credit Losses in our consumer credit card portfolio. These
increases included higher credit card net charge-offs of $791 million,
of which $320 million was attributed to the addition of the
FleetBoston credit card portfolio. Organic growth, overall seasoning of
credit card accounts, the return of securitized loans to the balance
sheet, and increases in minimum payment requirements drove higher
net charge-offs and Provision for Credit Losses. For more information
on credit quality, see Credit Risk Management beginning on page 58.
BANK OF AMERICA 2004 35
•
•
i
•
�
��
•
Noninterest Expense
Noninterest Expense
(D011ars in millions) 2004 2003
Personnel $13,473 $10,446
Occupancy 2,379 2,006
Equipment 1,214 1,052
Marketing 1,349 985
Professional fees 836 844
Amortization of intangibles 664 217
Data processing 1,325 1,104
Telecommunications 730 571
Other general operating 4,439 2,930
Merger and restructuring charges 618 -
Total noninterest expense $ 27,027 $ 20,155
Noninterest Expense increased $6.9 billion to $27.0 billion in 2004,
due primarily to the addition of FleetBoston, which contributed
$5.0 billion of Noninterest Expense.
• Personnel Expense increased $3.0 billion due to the $2.3 billion
impact of FleetBoston associates.
• Marketing Expense increased $364 million due to increased
advertising for card programs and increased advertising costs
in the Northeast.
• Amortization of Intangibles increased $447 million driven by the
amortization of intangible assets acquired in the Merger.
' Other General Operating Expense increased $1.5 billion related
to the $904 million impact of the addition of FleetBoston, $370
million of litigation expenses incurred during 2004 and the
$285 million related to the mutual fund settlement (net of a
$90 million reserve established in 2003). This net settlement
expense was divided equally between Global Capital Markets
and Investment Banking and Global Wealth and Investment
Management for business segment reporting purposes.
• Merger and Restructuring Charges, including an infrastructure
initiative, were $618 million in connection with the integration
of FleetBoston's operations. For more information on Merger
and Restructuring Charges, see Note 2 of the Consolidated
Financial Statements.
For more information on Noninterest Expense, see Business
Segment Operations beginning on page 40.
Income Tax Expense
Income Tax Expense was $7.1 billion, reflecting an effective tax rate
of 33.4 percent, in 2004 compared to $5.1 billion and 31.8 percent,
respectively, in 2003. The difference in the effective tax rate between
years resulted primarily from the application of purchase accounting
to certain leveraged leases acquired in the Merger, an increase in
state tax expense generally related to higher tax rates in the
Northeast and the reduction in 2003 of Income Tax Expense result-
ing from a tax settlement with the IRS. For more information on
Income Tax Expense, see Note 17 of the Consolidated Financial
Statements.
36 BANK OF AMERICA 2004
Assets
Average Loans and Leases increased $116.5 billion, or 33 percent,
in 2004. Of this increase, $88.9 billion related to the addition of
FleetBoston. The remaining increase was driven by growth in our res-
idential mortgage and consumer credit card portfolios of $16.1 billion
and $10.1 billion, respectively. Average Available-for-sale (AFS)
Securities increased $79.7 billion, or 114 percent, as a result of
investing excess cash from deposit growth and repositioning our ALM
portfolio. Additionally, average trading-related assets increased
$55.0 billion as we expanded our trading book to accommodate the
needs of our clients. For more information, see Table I on page 84.
Liabilities and Shareholders' Equity
Average core deposits increased $130.7 billion, or 36 percent. Of
this increase, $95.6 billion is attributable to the addition of
FleetBoston. The remaining increase was attributable to organic
growth which resulted from our continued improvements in customer
satisfaction, new product offerings and our account growth efforts. At
December 31, 2004, our Tier 1 Capital ratio was 8.10 percent, com-
pared to a ratio of 7.85 percent at December 31, 2003. For more
information, see Table I on page 84 and Note 14 of the Consolidated
Financial Statements.
F1eetBoston Merger
Pursuant to the Agreement and Plan of Merger, dated October 27,
2003, between the Corporation and FleetBoston (the Merger
Agreement), we acquired 100 percent of the outstanding stock of
FleetBoston on April 1, 2004. The Merger created a banking institution
with leading market shares throughout the Northeast, Southeast,
Southwest and West regions of the United States. FleetBoston's
results of operations were included in the Corporation's results beginning
April 1, 2004.
As provided by the Merger Agreement, approximately 1.069 billion
shares of FleetBoston common stock were exchanged for approxi-
mately 1.187 billion shares of the Corporation's common stock, as
adjusted for the stock split. At the date of the Merger, this repre-
sented approximately 29 percent of the Corporation's outstanding
common stock. FleetBoston shareholders also received cash of $4
million in lieu of any fractional shares of the Corporation's common
stock that would have otherwise been issued on April 1, 2004.
Holders of FleetBoston preferred stock received 1.1 million shares of
the Corporation's preferred stock. The purchase price was adjusted
to reflect the effect of the 15.7 million shares of FleetBoston common
stock that we already owned.
�
In connection with the Merger, we implemented a plan to integrate banking centers in the former FleetBoston franchise, as well as a
our operations with FleetBoston's. During 2004, including an infra- majority of outstanding credit cards. In addition, we began to rollout
structure initiative, $618 million was recorded as Merger and customer service platforms, including Premier Banking, to the
Restructuring Charges and $658 million was recorded as an adjust- Northeast. We also completed several key systems conversions
ment to Goodwill related to these activities. During 2004, our inte- necessary for full integration. For more information on the Merger,
gration activities progressed according to schedule. We rebranded all see Note 2 of the Consolidated Financial Statements.
Tab10 1 Five-Year Summary of Selected Financial Data�l>
�ooilars in miilions, except per share information) 2004 2003 2002 2001 2000
Income statement
Net interest income $ 28,797 $ 21,464 $ 20,923 $ 20,290 $ 18,349
Noninterest income 20,097 16,450 13,580 14,348 14,582
Total revenue 48,894 37,914 34,503 34,638 32,931
Provision for credit losses 2,769 2,839 3,697 4,287 2,535
Gains on sales of debt securities 2,123 941 630 475 25
Noninterest expense 27,027 20,155 18,445 20,709 18,633
Income before income taxes 21,221 15,861 12,991 10,117 11,788
Income tax expense 7,078 5,051 3,742 3,325 4,271
Net income 14,143 10,810 9,249 6,792 7,517
Average common shares issued and outstanding (in thousands) 3,758,507 2,973,407 3,040,085 3,159,914 3,292,797
Average diluted common shares issued and outstanding (in thousands) 3,823,943 3,030,356 3,130,935 3,251,308 3,329,858
Performance rffiios
Return on average assets 1.35°� 1.44% 1.41% 1.05% 1.12°h
Return on average common shareholders' equity 16.83 21.99 19.44 13.96 15.96
Total equity to total assets (at year end) 8.97 6.67 7.78 7.87 7.45
Total average equity to total average assets 8.06 6.57 7.28 7.55 7.03
Dividend payout 45.67 _ 39.58 _40.07 53.44 __ 45.02 �
Per common share data
Earnings $ 3.76 $ 3.63 $ 3.04 $ 2.13 $ 2.28
Diluted earnings 3.69 3.57 2.95 2.09 2.26
Dividends paid 1.70 1.44 1.22 1.14 1.03
Book value 24.56 16.63 16.75 15.54 14.74
Average balance sheet
Total loans and leases $ 472,645 $ 356,148 $ 336,819 $ 365,447 $ 392,622
Total assets 1,044,660 749,056 653,774 644,887 670,078
Total deposits 551,559 406,233 371,479 362,653 353,294
Long-term debt 93,330 68,432 66,045 69,622 70,293
Common shareholders' equity 83,953 49,148 47,552 48,609 47,057
Total shareholders' equity 84,183 49,204 47,613 48,678 47,132
Capital ratios (at year end)
Risk-based capital:
Tier 1 8.10°k 7.85% 8.22% 8.30k 7.50%
Total 11.63 11.87 12.43 12.67 11.04
Leverage 5.82 5.73 6.29 6.55 6.11
Market price per share of common stock
Closing $ 46.99 $ 40.22 $ 34.79 $ 31.48 $ 22.94
High closing 47.44 41.77 38.45 32.50 29.63
Low closing 38.96 32.82 27.08 23.38 19.00
�1� As a result of the adoption of Statement of Financial Accounting Standartls (SFAS) No. 142 "Goodwill and Other In[angible Assets" (SFAS 142) on January 1, 2002, we no longer amortize Gootlwill.
Goodwill amortization expense was $662 and $635 in 2001 antl 2000, respectively.
•
BANK OF AMERICA 2004 37
•
�
•
Supplemental Financial Data
Table 2 provides a reconciliation of the supplemental financial data
mentioned below with GAAP financial measures. Other companies
may define or calculate supplemental financial data differently.
Operating Basis Presentation
In managing our business, we may at times look at performance
excluding certain non-recurring items. For example, as an alternative
to Net Income, we view results on an operating basis, which repre-
sents Net Income excluding Merger and Restructuring Charges. The
operating basis of presentation is not defined by accounting princi-
ples generally accepted in the United States (GAAP). We believe that
the exclusion of Merger and Restructuring Charges, which represent
events outside our normal operations, provides a meaningful period-
to-period comparison and is more reflective of normalized operations.
Net Interest Income - FTE Basis
In addition, we view Net Interest Income and related ratios and analysis
(i.e. efficiency ratio, net interest yield and operating leverage) on a
FfE basis. Although this is a non-GAAP measure, we believe manag-
ing the business with Net Interest Income on a FfE basis provides a
more accurate picture of the interest margin for comparative pur-
poses. To derive the FfE basis, Net Interest Income is adjusted to
reflect tax-exempt interest income on an equivalent before tax basis
with a corresponding increase in Income Tax Expense. For purposes
of this calculation, we use the federal statutory tax rate of 35 percent.
This measure ensures comparability of Net Interest Income arising
from both taxable and tax-exempt sources.
38 BANK OF AMERICA 2004
Performance Measures
As mentioned above, certain performance measures including the
efficiency ratio, net interest yield, and operating leverage utilize Net
Interest Income (and thus Total Revenue) on a FfE basis. The effi-
ciency ratio measures the costs expended to generate a dollar of
revenue, and net interest yield evaluates how many basis points we
are earning over the cost of funds. Operating leverage measures the
total percentage revenue growth minus the total percentage expense
growth for the corresponding period. During our annual integrated
plan process, we set operating leverage and efficiency targets for the
Corporation and each line of business. Targets vary by year and by
business and are based on a variety of factors, including: maturity of
the business, investment appetite, competitive environment, market
factors, and other items (i.e. risk appetite). The aforementioned per-
formance measures and ratios, earnings per common share (EPS),
return on average assets, return on average common shareholders'
equity and dividend payout ratio, as well as those measures discussed
more fully below are presented in Table 2, Supplemental Financial
Data and Reconciliations to GAAP Financial Measures.
Return on Average Equity and Shareholder �alue Added
We also evaluate our business based upon return on average equity
(ROE) and shareholder value added (SVA) measures. ROE and SVA,
both utilize non-GAAP allocation methodologies. ROE measures the
earnings contribution of a unit as a percentage of the Shareholders'
Equity allocated to that unit. SVA is defined as cash basis earnings
on an operating basis less a charge for the use of capital. For more
information, see Basis of Presentation beginning on page 40. Both
measures are used to evaluate the Corporation's use of equity
(i.e. capital) at the individual unit level and are integral components
in the analytics for resource allocation. Using SVA as a performance
measure places specific focus on whether incremental investments
generate returns in excess of the costs of capital associated with
those investments. Investments and initiatives are analyzed using
SVA during the annual planning process for maximizing allocation of
corporate resources. In addition, profitability, relationship and
investment modets all use SVA and ROE as key measures to support
our overall growth goal.
Tab18 2 Supplemental Financial Data and Reconciliations to GAAP Financial Measures
(Dollars in millions, except per share information)
Operating basis�1.2�
Operating earnings
Operating earnings per common share
Diluted operating earnings per common share
Shareholder value added
Return on average assets
Return on average common shareholders' equity
Efficiency ratio (fully taxable-equivalent basis)
Dividend payout ratio
Fully taxable-equlvalent basis data
Net interest income
Total revenue
Net interest yield
Efficiency ratio
2004 2003 2002
$ 14,554 $ 10,810 $ 9,249
3.87 3.63 3.04
3.80 3.57 2.95
5,983 5,621 3,760
1.39°� 1.44°� 1.41%
17.32 21.99 19.44
53.23 52.27 52.56
44.38 39.58 40.07
$ 29,513 $ 22,107 $ 21,511
49,610 38,557 35,091
3.26°k 3.40°� 3.77°�
54.48 52.27 52.56
i
2001 2000
$ 8,042 $ 7,863
2.52 2.39
2.47 2.36
3,087 3,081
1.25°� 1.17%
16.53 16.70
55.47 54.38
45.13 43.04
$ 20,633 $ 18,671
34,981 33,253
3.68% 3.20°�
59.20 56.03
Reconciliation of net income to operating earnings
Net income $ 14,143 $ 10,810 $ 9,249 $ 6,792 $ 7,517
Merger and restructuring charges 618 - - 1,700 550
Related income tax benefit (207) - - (450) (204)
Operating earnings $ 14,554 $ 10,810 $ 9,249 $ 8,042 $ 7,863
Reconciliation of EPS to operating EPS
Earnings per common share $ 3.76 $ 3.63 $ 3.04 $ 2.13 $ 2.28
Effect of inerger and restructuring charges, net of tax benefit 0.11 - - 0.39 0.11
Operating earnings per common share $ 3.87 $ 3.63 $ 3.04 $ 2.52 $ 2.39
Reconciliatfon of diluted EPS to diluted operating EPS
Diluted earnings per common share $ 3.69 $ 3.57 $ 2.95 $ 2.09 $ 2.26
Effect of inerger and restructuring charges, net of tax benefit 0.11 - - 0.38 0.10
Diluted operating earnings per common share $ 3.80 $ 3.57 $ 2.95 $ 2.47 $ 2.36
Reconcilfation of net income to shareholder value added
Net income $ 14,143 $ 10,810 $ 9,249 $ 6,792 $ 7,517
Amortization of intangibles 664 217 218 878 864
Merger and restructuring charges, net of tax benefit 411 - - 1,250 346
Cash basis earnings on an operating basis 15,218 11,027 9,467 8,920 8,727
Capital charge (9,235) (5,406) (5,707) (5,833) (5,646)
Shareholder value added $ 5,983 $ 5,621 $ 3,760 $ 3,087 $ 3,081
Reconclliation of return on average assets to operating return on average assets
Return on average assets 1.35°k 1.44°k 1.41% 1.05% 1.12%
Effect of inerger and restructuring charges, net of tax benefit 0.04 - - 0.20 0.05
Operating return on average assets 1.39°k 1.44k 1.41°� 1.25% 1.17%
Reconciliation of return on average common shareholders' equity
to operating return on average common shareholders' equity
Return on average common shareholders' equity 16.83% 21.99% 19.44% 13.96% 15.96%
Effect of inerger and restructuring charges, net of tax benefit 0.49 - - 2.57 0.74
Operating return on average common shareholders' equity 17.32°h 21.99°k 19.44% 16.53% 16.70%
Reconciliation of efficiency ratio to operating efficiency ratio
(fully taxable-equivalent basis)
Efficiency ratio 54.48°� 52.27% 52.56% 59.20% 56.03°h
Effect of inerger and restructuring charges, net of tax benefit (1.25) - - (3.73) (1.65)
Operating efficiency ratio 53.23°k 52.27°� 52.56% 55.47°� 54.38%
Reconcfliation of dividend payout ratio to operating dividend payout ratio
Dividend payout ratio 45.67�0 39.58% 40.07% 53.44% 45.02°�
Effect of inerger and restructuring charges, net of tax benefit (1.29) - - (8.31) (1.98)
Operating dividend payout ratio 44.38°� 39.58% 40.07°� 45.13% 43.04°,G
�11 Operating basis excludes Merger and Restmctunng Charges. Merger and Restructuring Charges were $618 and $550 in 2004 and 2000, respec[ively. Merger and Restructuring Charges in 2001 repre-
sentetl Provision for Credit Losses of $395 and Noninterest 6cpense of $1,305, both of which were related to the exit of certain consumer finance businesses.
�2) As a result of the atloption of SFAS 142 on January 1, 2002, we no longer amortize Goodwill. Goodwill amortization expense was $662 antl $635 in 2001 and 2000, respectively.
BANK OF AMERICA 2004 39
�
�
•
�
•
Core Net Interest Income
In addition, we review core net interest income which adjusts reported
Net Interest Income on a FfE basis for the impact of trading-related
activities. As discussed in the Global Capital Markets and Investment
Banking business segment section beginning on page 46, we evaluate
our trading results and strategies based on total trading-related rev-
enue, calculated by combining trading-related Net Interest Income with
Trading Account Profits. We also adjust for loans that we originated and
sold into revolving credit card, home equity line and commercial loan
securitizations. Noninterest Income, rather than Net Interest Income
and Provision for Credit Losses, is recorded for assets that have been
securitized as we are compensated for servicing the securitized assets
and record servicing income and gains or losses on securitizations,
where appropriate. An analysis of core net interest income, earning
assets and yields, which excludes these two non-core items from
reported Net Interest Income on a FTE basis, is shown below.
�I'ab10 3 Core Net Interest Income
(Dollars in millions) 2004 2003 2002
Net interest income
As reported
(fully taxable-equivalent basis) $ 29,513 $ 22,107 $ 21,511
Trading-related net interest income (2,039) (2,239) (1,977)
Impact of revolving securitizations 931 313 517
Core net interest income $ 28,405 $ 20,181 $ 20,051
Average earning assets
As reported $ 905,302 $ 649,548 $ 570,530
Trading-related earning assets (227,861) (172,825) (121,291)
Impact of revolving securitizations 10,181 3,342 5,943
Core average earning assets $ 687,622 $ 480,065 $ 455,182
Net interest yield on earning assets
As reported
(fully taxable-equivalent basis) 3.26% 3.40% 3.77%
Impact of trading-related activities 0.80 0.76 0.58
Impact of revolving securitizations 0.06 0.03 0.05
Core net interest yield on
earning assets 4.12% 4.19°h 4.40%
Core net interest income increased $8.2 billion for 2004. Approximately
half of the increase was due to the Merger. Other activities within the
portfolio affecting core net interest income were higher ALM portfolio lev-
els, the impact of higher rates, higher consumer loan levels (primarily
credit card loans and home equity lines) and higher core deposit fund-
ing levels, partially offset by reductions in the large corporate and foreign
loan balances, and lower mortgage warehouse levels.
Core average earning assets increased $207.6 billion primarily
due to higher ALM levels, (primarily securities and mortgages) and
higher levels of consumer loans (primarily credit card loans and home
equity lines). The increases in these assets were due to both the
Merger and organic growth.
The core net interest yield decreased seven bps due to the
impact of ALM portfolio repositioning, partially offset by the impact of
higher levels of consumer loans and core deposits.
40 BANK OF AMERICA 2004
Business Segment Operations
Segment Description
In connection with the Merger, we realigned our business segment
reporting to reflect the new business model of the combined company.
As a part of this realignment, the segment formerly reported as
Consumer and Commercial Banking was split into two new segments,
Global Consumer and Small Business Banking and Global Business and
Financial Services. We have repositioned Asset Management as Global
Wealth and Investment Management, which now includes Premier
Banking. Premier Banking was included in Consumer and Commercial
Banking in the past, and is made up of our afFluent retail customers.
This will enable us to serve our customers with a diverse offering of
wealth management products. Global Capital Markets and Investment
Banking remained relatively unchanged, with the exception of moving
the commercial leasing business to Global Business and Financial
Services, and Latin America moving to All Other. All Other consists
primarily of Latin America, the former Equity Investments segment,
Noninterest Income and Expense amounts associated with the ALM
process, including Gains on Sales of Debt Securities, the allowance
for credit losses process, the residual impact of inethodology allocations,
intersegment eliminations, and the results of certain consumer
finance and commercial lending businesses that are being liquidated.
Basis of Presentation
We prepare and evaluate segment results using certain non-GAAP
methodologies and performance measures many of which were dis-
cussed in Supplemental Financial Data on page 38. The starting
point in evaluating results is the operating results of the businesses,
which by definition excludes Merger and Restructuring Charges. The
segment results also reflect certain revenue and expense method-
ologies, which are utilized to determine operating income. The Net
Interest Income of the business segments includes the results of a
funds transfer pricing process that matches assets and liabilities
with similar interest rate sensitivity and maturity characteristics. Net
Interest Income also reflects an allocation of Net Interest Income
generated by assets and liabilities used in our ALM process. The
results of business segments will fluctuate based on the perform-
ance of corporate ALM activities.
Certain expenses not directly attributable to a specific business
segment are allocated to the segments based on pre-determined
means. The most significant of these expenses include data pro-
cessing costs, item processing costs and certain centralized or
shared functions. Data processing costs are allocated to the seg-
ments based on equipment usage. Item processing costs are allo-
cated to the segments based on the volume of items processed for
each segment. The costs of certain centralized or shared functions
are allocated based on methodologies which reflect utilization.
Equity is allocated to business segments using a risk-adjusted
methodology incorporating each unit's credit, market and operational
risk components. The nature of these risks is discussed further
beginning on page 58. ROE is calculated by dividing Net Income by
allocated equity. SVA is defined as cash basis earnings on an oper-
ating basis less a charge for the use of capital (i.e. equity). Cash
basis earnings on an operating basis are defined as Net Income
adjusted to exclude Merger and Restructuring Charges, and
Amortization of Intangibles. The charge for use of capital is calcu-
lated by multiplying 11 percent (management's estimate of the share-
holders' minimum required rate of return on capital invested) by
average total common shareholders' equity at the corporate level and
by average allocated equity at the business segment level. Average
equity is allocated to the business level using a methodology identi-
cal to that used in the ROE calculation. Management reviews the esti-
mate of the rate used to calculate the capital charge annually. In
2003, management reduced this rate from 12 percent to 11 percent.
We use the Capital Asset Pricing Model to estimate our cost of capital.
The change in the cost of capital rate from 12 percent to 11 percent
was driven by a decline in long-term Treasury rates, which impacted
the risk-free rate component of the calculation.
See Note 19 of the Consolidated Financial Statements for addi-
tional business segment information, selected financial information
for the business segments and reconciliations to consolidated Total
Revenue, Net Income and Total Assets amounts.
Global Consumer and Small Business Banking
Our strategy is to attract, retain and deepen customer relationships.
A critical component of that strategy includes continuously improving
customer satisfaction. We believe this focus will help us achieve our
goal of being recognized as the best retail bank in North America.
The major businesses within this segment are Consumer
Banking, Consumer Products and Small Business Banking.
Consumer Banking distributes a wide range of services to
33 million consumer households in 29 states and the District of
Columbia through its network of 5,885 banking centers, 16,791
domestic branded ATMs, and telephone and Internet channels.
Consumer Banking distributes a wide range of products, and serv-
ices, including deposit products such as checking accounts, money
market savings accounts, time deposits and IRAs, debit card products,
and credit products such as credit card, home equity products and
residential mortgages. Consumer Banking recorded $16.7 billion of
Total Revenue for 2004. This represented a 35 percent increase. Total
average Deposits within Consumer Banking were $276.7 billion, up 35
percent from 2003.
Consumer Products provides and manages products and services
including the issuance and servicing of credit cards, origination,
fulfillment and servicing of residential mortgage loans, including
home equity loan products, direct banking via the Internet, deposit
services, student lending and certain insurance services. Consumer
Products contributed $8.4 billion of Total Revenue, which represented
a 16 percent improvement. Average Loans and Leases during the
year increased 52 percent to $49.9 billion.
Small Business Banking helps small businesses grow through
the offering of business products and services which include payroll,
merchant services, online banking and bill payment, as well as 401(k)
programs. In addition, we provide specialized products like treasury
management, lockbox, check cards with photo security and succession
planning. Small Business Banking reported $1.7 billion of Total
Revenue, compared to $1.2 billion in 2003. Average Loans and
Leases improved 28 percent to $15.3 billion. Also, Total Deposits
within Small Business Banking grew 37 percent to $31.9 billion due
to the impact of the Merger and account growth.
Global Consumer and Small Business Banking
(Dollars in millions)
Net interest income (fully taxable-equivalent basis)
Noninterest income
Total revenue
Provision for credit losses
Gains on sales of debt securities
Noninterest expense
Income before income taxes
Income tax expense
Net income
Shareholder value added
Net interest yield (fully taxable-equivalent basis)
Return on average equity
Efficiency ratio (fully taxable-equivalent basis)
Average:
Total loans and leases
Total assets
Total deposits
Common equity/Allocated equity
Year end:
Total loans and leases
Total assets
Total deposits
2ooa
$ 17,308
9,549
26,857
3,341
117
13,334
10,299
3,751
$ 6,548
$ 3,390
5.35°�
19.89
49.64
2003
$ 12,114
8,816
20,930
1,678
13
10,333
8,932
3,226
$ 5,706
$ 4,367
4.98 %
42.25
49.37
$137,357 $ 92,776
352,789 258,251
314,652 240,371
32,925 13,505
156,280 97,341
378,359 264,578
333,723 240,428
Total Revenue for Global Consumer and Small Business Banking
increased $5.9 billion, or 28 percent, of which FleetBoston con-
tributed $4.3 billion. Provision for Credit Losses increased $1.7 billion
to $3.3 billion. Noninterest Expense grew by $3.0 billion, or 29 percent,
to $13.3 billion. Net Income rose $842 million, or 15 percent, including
the $1.1 billion impact of the addition of FleetBoston. SVA decreased
$977 million, or 22 percent. This decrease was caused by an
increase in the capital allocation as a result of the Merger partially
offset by the increase in cash basis earnings.
BANK OF AMERICA 2004 41
•
�
•
u
�
C�
Our extensive network of delivery channels including banking
centers, ATMs, telephone channel and online banking enable us to
provide cost effective, convenient and innovative products to our
customers. Active online banking subscribers increased 73 percent
in 2004. Approximately half of this growth was due to the addition
of FleetBoston.
Net Interest Income increased $5.2 billion largely due to the net
effect of the growth in consumer loan and lease, and deposit bal-
ances, and ALM activities. Net Interest Income was positively
impacted by the $44.6 billion, or 48 percent, increase in average
Loans and Leases. This increase was driven by a$15.2 billion, or 54
percent, increase in average on-balance sheet consumer credit card
outstandings, a$14.8 billion, or 83 percent, increase in home equity
lines and a$6.8 billion, or 26 percent, increase in residential mort-
gages. The FleetBoston portfolio accounted for $5.0 billion, $14.0
billion and $10.8 billion of the increases, respectively.
Deposit growth positively impacted Net Interest Income. Higher
consumer deposit balances from the addition of FleetBoston cus-
tomers of $63.1 billion, government tax cuts, higher customer retention
and our focus on adding new customers drove the $74.3 billion, or
31 percent, increase in average Deposits.
Noninterest Income increased $733 million, or eight percent, to
$9.5 billion in 2004. FleetBoston contributed $1.4 biilion to
Noninterest Income. Overall, this increase was primarily due to a
$1.5 billion, or 49 percent, increase in Card Income to $4.5 billion
and a$913 million, or 25 percent, increase in Service Charges to
$4.5 billion. Card Income increased mainly due to increases in pur-
chase volumes for both credit and debit cards, and increases in aver-
age managed credit card outstandings. These increases were due to
both the growth of our card businesses, and the addition of the
FleetBoston portfolio. The increase in Service Charges was due pri-
marily to the addition of FleetBoston customers and the growth in
new accounts. Partially offsetting these increases was a$1.5 billion,
or 72 percent, decrease in Mortgage Banking Income to $595 million
and a$186 million decrease in Trading Account Profits to a loss of
$359 million. The decrease in Mortgage Banking Income was due to
decreases in production volume and secondary market sales, com-
bined with the MSR impairments recorded during the second half of the
year. The decrease in Trading Account Profits was due to the negative
impact of faster prepayment speeds and changes in other assumptions
on the value of the Excess Spread Certificates (Certificates) prior
to their conversion to MSRs. For more information on the conversion
of the Certificates into MSRs, see Note 1 of the Consolidated
Financial Statements.
42 BANK OF AMERICA 2004
The Provision for Credit Losses increased $1.7 billion to
$3.3 biliion, including higher credit card net charge-offs of $791 million,
of which $320 million was attributed to the addition of the
FleetBoston credit card portfolio. Organic growth, overall seasoning of
credit card accounts, the return of securitized loans to the balance
sheet, and increases in minimum payment requirements drove higher
net charge-offs and Provision for Credit Losses. The increase in min-
imum payment requirements is the result of changes in industry prac-
tices and will result in increased charge-offs in 2005. For more
information, see Credit Risk Management beginning on page 58.
Noninterest Expense increased $3.0 billion, or 29 percent.
Driving this increase were increases in Processing Costs of $977 million,
Personnet Expense of $763 million and Other General Operating
Expense of $512 million. Personnel Expense increased as a result of
higher salaries of $537 million and higher benefit costs of $185 million.
The impact of the addition of FleetBoston to Noninterest Expense
was $1.9 billion, including $538 million of Personnel Expense and
$443 million of Data Processing Costs.
Across the three major businesses within Global Consumer and
Small Business Banking, our most significant product lines are Card
Services, Consumer Real Estate and Consumer Deposit Products.
Card Services
Card Services provides a broad offering of credit cards to an array of
customers including consumers and small businesses. Our products
include traditional credit cards, a variety of co-branded and affinity
card products, as well as purchasing, and travel and entertainment
card products. We also provide processing services for merchant
card receipts, a business where we are a market leader, due in part
to our acquisition of NPC during the fourth quarter of 2004.
We evaluate our Card Services business on both a held and
managed basis. Managed card revenue excludes the impact of card
securitization activity, which is used as a financing tool. On a held
basis, for assets that have been securitized, we record Noninterest
Income, rather than Net Interest Income and Provision for Credit
Losses, as we are compensated for servicing income and gains or
losses on securitizations. Managed card revenue excludes the impact
of the securitized credit card portfolio of $134 million and $7 million
for 2004 and 2003, respectively. These amounts are the result of the
differences in internal and external funding costs as well as the amor-
tization of previously recognized securitization gains. After the revolv-
ing period of the securitizations, the card receivables will return to our
Balance Sheet. This has the effect of increasing Loans and Leases on
our Balance Sheet and increasing Net Interest Income and the
Provision for Credit Losses, with a reduction in Noninterest Income.
The following table presents the components of Total Revenue
for Card Services on a managed and held basis.
Card Services Revenue
2004 2003
(D011ars in millions) Managed Held Managed Held
Net interest income $ 5,079 $4,236 $ 2,856 $ 2,537
Noninterest income 3,061 3,246 1,930 2,065
Total card services revenue $ 8,140 $7,482 $ 4,786 $ 4,602
Strong credit card performance and the addition of the FleetBoston
card portfolio drove Card Services results. Held credit card revenue
increased $2.9 billion, or 63 percent, to $7.5 billion. Driving this
increase was the $1.7 billion increase in held Net Interest Income,
due to a$15.2 billion, or 54 percent, increase in average held con-
sumer credit card outstandings, partially offset by a decline in average
Deposits of $3.3 billion. The increase in held consumer credit card
outstandings was due to the addition of over five million new accounts
through our branch network and direct marketing programs, and the
$5.0 billion impact of the addition of the held FleetBoston consumer
credit card portfolio. The decline in Deposits was due to a change in
the fee structure in the merchant business for certain accounts from
a compensating balance to a fee for service agreement. Managed
credit card revenue increased $3.4 billion, or 70 percent, to $8.1 billion.
This increase included the $2.2 billion, or 78 percent, increase in
managed Net Interest Income. Average managed consumer credit card
outstandings were $50.3 billion in 2004 compared to $31.6 billion.
The increase in held credit card Noninterest Income of $1.2 billion
resulted from higher interchange fees of $381 million. Interchange
fees increased mainly due to a$21.4 billion, or 38 percent, increase
in consumer credit card purchase volumes. Also impacting
Noninterest Income were increases in late fees of $238 million, mer-
chant discount fees of $197 million, overlimit fees of $107 million
and cash advance fees of $64 million. The effect of the addition of
FleetBoston on these fee categories was $169 million on interchange
fees, $77 million on late fees, $47 million on merchant discount
fees, $37 million on overlimit fees, and $24 million on cash advance
fees, respectively. Noninterest Income on a managed basis increased
$1.1 billion, or 59 percent, during 2004.
The held Provision for Credit Losses increased $1.2 billion, or
68 percent, to $3.0 billion driven by higher net charge-offs of $791
million, of which $320 million was attributable to the addition of the
FleetBoston card portfolio. Organic growth, overall seasoning of
accounts, the return of securitized loans to the balance sheet and
increases in minimum payment requirements drove higher net
charge-offs and Provision for Credit Losses. Net losses on the port-
folio that was securitized were $524 million and $177 million for
2004 and 2003. The increase was attributable to the addition of the
FleetBoston portfolio. For more information, see Credit Risk
Management beginning on page 58.
Consumer Real Estate
Consumer Real Estate generates revenue by providing an extensive
line of mortgage products and services to customers nationwide.
Consumer Real Estate products are available to our customers
through a retail network of personal bankers located in 5,885 bank-
ing centers, dedicated sales account executives in over 190 loca-
tions and through a devoted sales force offering our customers direct
telephone and online access to our products. Additionally, we serve
our customers through a partnership with more than 7,200 mortgage
brokers in all 50 states. The mortgage product offerings for home
purchase and refinancing needs include fixed and adjustable rate
loans, first and second lien loans, home equity lines of credit, and lot
and construction loans. To manage this portfolio, these products are
either sold into the secondary mortgage market to investors while we
retain the customer relationship and servicing rights or are held in
our ALM portfolio.
Consumer Real Estate is managed with a focus on its two primary
businesses, first mortgage and home equity. The first mortgage busi-
ness includes the origination, fulfiliment and servicing of first mort-
gage loan products. The home equity business includes lines of
credit and second mortgages. These two businesses provide us with
a business model that meets customer mortgage borrowing needs in
various interest rate cycles.
The following table shows the revenue components of the
Consumer Real Estate business.
Consumer Real Estate Revenue
(Dollars in millions) 2004 2003
Net interest income $ 2,224 $1,795
Mortgage banking income�12� 595 2,140
Trading account profits (349) (159)
Gains on sales of debt securities 117 —
Other income 61 96
Total consumer real estate revenue $ 2,648 $ 3,872
(1) Includes gains related to hedge ineffectiveness of cash flow hedges on our mortgage
warehouse of $117 and $38 for 2004 and 2003.
�z� Por 2004 anA 2003, Mortgage eanking Income included revenue of $181 antl $218 for
morigage services provided to other segments that are eliminated in consolidation (in All O[herJ.
Total revenue for the Consumer Real Estate business decreased by
$1.2 billion, or 32 percent, in 2004. Net Interest Income increased
by $429 million driven by higher average balances in the home equity
line and loan portfolio, which grew from $21.7 billion in 2003 to
$39.0 billion in 2004. This portfolio growth was attributable to an
expanded home equity market through the addition of FleetBoston,
which contributed $18.5 billion, and the increased product distribu-
tion. The home equity business had a record year in 2004, producing
$57.1 billion in loans and lines compared to $23.4 billion in 2003.
Partially offsetting this growth, Net Interest Income decreased $90
million in 2004 due to a lower level of escrow deposits held on loans
serviced. Average escrow balances declined $2.8 billion during the
year.
BANK OF AMERICA 2004 43
•
�
•
�
�
•
Mortgage Banking Income decreased from $2.1 billion in 2003
to $595 million. The following summarizes the components of
Mortgage Banking Income. Mortgage Banking Income includes the
performance of loans sold in the secondary market and the performance
of the servicing portfolio.
Mortgage Banking Income
(D011ars in millions) 2004 2003
Production income $ 771 $1,927
Servicing income:
Servicing fees and ancillary income 614 348
Amortization of MSRs (345) (135)
Net MSR and SFAS 133 derivative
hedge adjustments�l� 18 —
Impairment of MSRs (463) —
Total net servicing income (176) 213
Total mortgage banking income $ 595 $ 2,140
�11 Represents tlerivative hedge gains of $228, offset by a tlecrease in the value of the MSRs
under SFAS 133 �etlges of $210 for 2004. See Note 8 of the Consolitlatetl Fnancial Statements.
The decrease in Mortgage Banking Income was primarily driven by a
decline in the size of the first mortgage production market from the
record levels of 2003. In 2004, we produced $87.5 billion residential
first mortgages compared to $131.1 billion in the prior year. Of the
2004 volume, $57.5 billion was originated through retail channels
and $30.0 billion was originated in our wholesale channel. This com-
pares to 2003 with $91.8 billion originated through retail channels
and $39.3 billion originated through wholesale channels. During
2004, approximately 58 percent of the production was refinance activ-
ity compared to 84 percent in 2003. Additionally, the market and cus-
tomer preference has shifted the mix of fixed rate loans to 64 percent
in 2004, down from 80 percent in 2003. The decline in the size of the
market, excess industry capacity, and the rising interest rate environ-
ment also resulted in decreased operating margins. The volume reduc-
tions resulted in lower loan sales to the secondary market, which
totaled $69.4 billion, a 35 percent decrease from the prior year.
During 2004, impairment charges totaled $463 million, includ-
ing a$261 million adjustment for changes in valuation assumptions
and prepayment adjustments to align with changing market condi-
tions and customer behavioral trends. As an economic hedge to the
changes associated with the value of MSRs, a combination of deriv-
atives and AFS securities (e.g. mortgage-backed securities) was uti-
lized. During 2004, Consumer Real Estate realized $117 million in
Gains on Sales of Debt Securities and $65 million of Net Interest
Income from Securities used as an economic hedge of MSRs. At
December 31, 2004, $564 million in MSRs were covered by these
economic hedges. The remaining $1.8 billion in MSRs were hedged
using a SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" (SFAS 133) strategy.
44 BANK OF AMERICA 2004
Additionally, contributing to Consumer Real Estate revenue,
Trading Account Profits decreased by $190 million. Prior to conversion
of the Certificates to MSRs in June 2004, changes in the value of the
Certificates, MSRs and derivatives used for risk management were
recognized as Trading Account Profits. Trading Account Profits
included $342 million and $310 million of downward adjustments for
changes to valuation assumptions and prepayment adjustments in
2004 and 2003, respectively. For more information on the conversion,
see Note 1 of the Consolidated Financial Statements.
Other income includes premiums collected through our mortgage
insurance captive and other miscellaneous revenue items.
Servicing income is recognized when cash is received for per-
forming servicing activities for others. Servicing activities primarily
include collecting cash for principal, interest and escrow payments
from borrowers, and accounting for and remitting principal and inter-
est payments to investors of mortgage-backed securities. Servicing
income also includes any ancillary income, such as late fees, derived
in connection with these activities. The servicing portfolio includes
originated and retained residential mortgages, loans serviced for
others and home equity loans. As discussed more fully below, the
servicing portfolio ended 2004 at $332.5 billion, an increase of
$57.4 billion from December 31, 2003. The addition of FleetBoston
customers contributed $33.8 billion of this increase.
We recognize an intangible asset for the MSRs, which repre-
sents the right to perform specified residential mortgage servicing
activities for others. The amount capitalized as MSRs represents the
current fair value of future net cash flows expected to be realized for
performing servicing activities. MSRs are amortized as a reduction of
actual servicing income received. The following table outlines statistical
information on the MSRs:
Mortgage Servicing Rights
December 31
(DO�lars in millions) 2004 2003
MSR data:
Balance«��> $ 2,359 $ 2,684
Capitalization rate 1.19°k 1.47%
Unpaid balance�3� $ 197,795 $183,116
Number of customers (in thousands) 1,582 1,586
�11 MSRS outsitle of Global Consumer and Small Business Banking at December 31, 2004 and 2003
were $123 and $78. respectively, in Global Capi[al Markets and Irnestmen[ Banking.
(zi Inclutles E2.283 of Certificates at December 31, 2003. For more information on the Certifca[es,
see Note 1 of the Consolidated Financial Statements.
�31 Represents only loans serviced for others.
As of December 31, 2004, the MSR balance was $2.4 billion, or 12
percent lower than at the end of 2003. This value represented 119
bps as a percent of the related unpaid principal balance, a 19 percent
decrease from 2003. For more information on MSRs, see Notes 1
and 8 of the Consolidated Financial Statements.
Consumer Deposit Products
Consumer Deposit Products provides a comprehensive range of deposit
products to consumers and small businesses. Our deposit products
include traditional savings accounts, money market savings accounts,
CDs and IRAs, regular and interest checking accounts, and a variety of
business checking options. These products are further segmented to
address customer specifc needs and our multicultural strategy.
We added approximately 2.1 million net new checking accounts
and 2.6 million net new savings accounts during 2004. This growth
resulted from continued improvement in sales and service results in
the Banking Center Channel, improved cross-sale ratios, the intro-
duction of new products, advancement of our multicultural strategy,
and access to the former FleetBoston franchise, where we opened
174,000 net new checking and 193,000 net new savings accounts
since April 1, 2004. Account growth has occurred through productivity
improvements in existing stores, as well as new store openings,
which totaled 167 in 2004.
We generate revenue on deposit products through the results of
a funds transfer pricing process that matches assets and liabilities
with similar interest rate sensitivity and maturity characteristics, fees
generated on our accounts, and interchange income from our debit
cards. Our deposit-taking activities are integrally linked to our liquid-
ity management and ALM interest rate risk management processes.
We seek to optimize the value of deposits through both our client-fac-
ing asset generation and our ALM investment process. The following
table presents the components of Total Revenue for Consumer
Deposit Products.
Consumer Deposit Products Revenue
(Dollars in millions) 2004 2003
Net interest income $ 7,735 $ 5,647
Deposit service charges 4,496 3,577
Debit card income 1,232 896
Total noninterest income 5,728 4,473
Total deposit revenue�1� $ 13,463 $ 10,120
�11 Deposit revenue outside of Global Consumer and Small Business Banking was $985 and $666,
respectively, for 2004 and 2003.
Deposit revenue grew $3.3 billion, or 33 percent. Driving this
growth was the addition of FleetBoston, which contributed $2.1 bil-
lion of deposit revenue.
Net Interest Income increased $2.1 billion, or 37 percent. The
primary driver of the increase was the $80.3 billion, or 35 percent,
increase in average Deposits. Of this growth, $63.0 billion was related
to the addition of FleetBoston customers through the Merger. The addi-
tion of FleetBoston contributed $1.5 biliion to Net Interest Income.
Deposit service charges increased $919 million, or 26 percent,
due to the $515 million impact of the addition of FleetBoston, and
the growth of new accounts across our franchise.
Debit card income increased $336 million, or 38 percent. Driving
the increase was growth in transaction activity, evidenced by a 40 percent
increase in purchase volumes, partially offset by the negative impact of
a lower interchange rate on signature debit card transactions. The impact
of the addition of FleetBoston to debit card income was $134 million.
Global Business and Financial Services
This segment provides financial solutions to our clients throughout all
stages of their financial cycles. Our strategy is to bring the capabili-
ties of a global financial services organization to the local level. We
serve our clients through a variety of businesses including Global
Treasury Services, Middle Market Banking, Commercial Real Estaie
Banking, Leasing, Business Capital and Dealer Financial Services.
Beginning in 2005, Global Business and Financial Services will include
Latin America. See page 49 for more information on Latin America.
Also beginning in 2005, Global Business and Financial Services will
include Business Banking, which serves our client-managed small
business customers.
Global Treasury Services provides integrated working capital
management and treasury solutions to clients across the U.S. and
37 countries. Our clients include multi-nationals, middle market com-
panies, correspondent banks, commercial real estate firms and gov-
ernments. Our services include treasury management, trade finance,
foreign exchange, short-term credit facilities and short-term investing.
The revenues and operating results where customers and clients are
serviced are reflected in this segment, as well as Global Consumer
and Small Business Banking, and Global Capital Markets and
Investment Banking.
Middle Market Banking provides commercial lending, treasury
management products and investment banking services to middle-
market companies across the U.S.
Commercial Real Estate Banking, with offices in more than 60
cities across the U.S., provides project financing and treasury man-
agement to private developers, homebuilders and commercial real
estate firms. Commercial Real Estate Banking also includes commu-
nity development banking, which provides lending and investing serv-
ices to low- and moderate-income communities.
Leasing provides leasing solutions to small business, middle-
market and large corporations in the U.S. and internationally, offer-
ing expertise in the municipal, corporate aircraft, healthcare and
vendor markets.
Business Capital provides asset-based lending financing solu-
tions customized to meet clients' capital needs by leveraging their
assets on a secured basis in the U.S., Canada and European markets.
Dealer Financial Services provides lending and investing serv-
ices, including floor plan programs for marine, recreational vehicle and
auto dealerships to more than 10,000 dealer clients across the U.S.
BANK OF AMERICA 2004 45
�
�
•
•
�
•
Global Business and Financial Services
(ool�ars in millions) 2004 2003
Net interest income (fully taxable-equivalent basis) $ 4,593 $ 3,118
Noninterest income 2,129 1,399
Total revenue 6,722 4,517
Provision for credit losses (241) 458
Noninterest expense 2,476 1,797
Income before income taxes 4,487 2,262
Income tax expense 1,654 791
Net income $ 2,833 $ 1,471
Shareholder value added $ 884 $ 846
Net interest yield (fully taxable-equivalent basis)
Return on average equity
Efficiency ratio (fully taxable-equivalent basis)
Average:
Total loans and leases
Total assets
Total deposits
Common equity/Allocated equity
Year end:
Total loans and leases
Total assets
Total deposits
3.40% 3.19°�
15.34 25.01
36.84 39.75
$129,671 $ 93,378
154,521 103,786
53,088 31,461
18,473 5,882
145,072 96,168
178,093 107,791
61,395 37,882
Total Revenue for Global Business and Financial Services increased
$2.2 billion, or 49 percent, in 2004. The addition of FleetBoston
accounted for $1.7 billion of the increase. The Provision for Credit
Losses decreased $699 million, to a negative $241 million.
Noninterest Expense increased $679 million to $2.5 billion. Net
Income rose $1.4 billion, or 93 percent, including the $824 million
impact of the Merger. SVA increased $38 million, or four percent. This
segment's capital allocation increased due to Goodwill as a result of
the Merger which was offset by the increase in Net Income.
Net Interest Income increased $1.5 billion, largely due to the
increase in commercial loan and lease, and deposit balances driven
by the addition of FleetBoston earning assets and the net results of
ALM activities. Net Interest Income was positively impacted by the
$36.3 billion, or 39 percent, increase in average outstanding com-
mercial loans. Also contributing to the improvement in Net Interest
Income was the $21.6 billion, or 69 percent, increase in average
commercial deposits. Impacting these increases was the $29.3 bil-
lion effect on average Loans and Leases, and the $17.6 billion effect
on average Deposits related to the addition of FleetBoston.
During 2004, Noninterest Income increased $730 million, or 52
percent, to $2.1 billion. Included in the results was $601 million of
Noninterest Income related to FleetBoston. Overall, the increase was
driven by a$341 million increase in Other Noninterest Income to
$518 million, and a$261 million, or 36 percent, increase in Service
Charges to $988 million. Other Noninterest Income increased by $109
million due to higher income from community development tax credit
real estate investments. The increase in Service Charges was primarily
driven by the Merger. Also affecting the increase in Noninterest Income
was the $43 million increase in Trading Account Profits.
46 BANK OF AMERICA 2004
The Provision for Credit Losses declined $699 million to a neg-
ative $241 million. The decrease was partially driven by a$264 mil-
lion, or 59 percent, decrease in net charge-offs. Additionally, notable
improvement in credit quality has been achieved in a number of our
major businesses. For more information, see Credit Risk
Management beginning on page 58.
Noninterest Expense increased $679 million, or 38 percent, due
to the $644 million addition of FleetBoston. Driving the increase was a
$300 million increase in total Personnel Expense and a$260 million
increase in Data Processing Expense.
Global Capital Markets and Investment Banking
Our strategy is to align our resources with sectors where we can
deliver value-added financial advisory solutions to our issuer and
investor clients. This segment provides a broad range of financial
services to domestic and international corporations, financial institu-
tions, and government entities. Clients are supported through offices
in 35 countries that are divided into four distinct geographic regions:
U.S. and Canada; Asia; Europe, Middle East and Africa; and Mexico.
Products and services provided include loan originations, mergers
and acquisitions advisory, debt and equity underwriting and trading,
cash management, derivatives, foreign exchange, leveraged finance,
structured finance and trade services.
This segment offers clients a comprehensive range of global
capabilities through the following three financial services:
Global Investment Banking, Global Credit Products and Global
Treasury Services.
Global Investment Banking is comprised of Corporate and
Investment Banking and Global Capital Markets. 6lobal Investment
Banking underwrites and makes markets in equity and equity-linked
securities, high-grade and high-yield corporate debt securities, com-
mercial paper, and mortgage-backed and asset-backed securities. We
also provide debt and equity securities research, loan syndications,
mergers and acquisitions advisory services and private placements.
Further, we provide risk management solutions for customers using
interest rate, equity, credit and commodity derivatives, foreign
exchange, fixed income and mortgage-related products. In support of
these activities, the businesses may take positions in these products
and participate in market-making activities. The Global Investment
Banking business is a primary dealer in the U.S. and in several inter-
national locations.
Global Credit Products provides credit and lending services for
our corporate clients and institutional investors. Global Credit
Products is also responsible for actively managing loan and counter-
party risk in our large corporate portfolio using available risk mitigation
techniques, including credit default swaps.
Global Treasury Services provides the technology, strategies and
integrated solutions to help financial institutions, government agencies
and corporate clients manage their cash flows.
Global Capital Markets and Investment Banking
(Dollars in millions)
Net interest income (fully taxable-equivalent basis)
Noninterest income
Total revenue
Provision for credit losses
Losses on sales of debt securities
Noninterest expense
Income before income taxes
If1COf1lB t8X 2XDeIlS2
Net income
Shareholder value added
Net interest yield (fully taxable-equivalent basis)
Return on average equity
Efficiency ratio (fully taxable-equivalent basis)
Average:
Total loans and leases
Total assets
Total deposits
Common equity/Allocated equity
Year end:
Total loans and leases
Total assets
Total deposits
2004
$ 4,122
4,927
9,049
(459)
(10)
6,556
2,942
992
$ 1,950
$ 891
1.49°k
19.46
72.45
$ 34,237
323,101
76,884
10,021
2003
$ 4,289
4,045
8,334
303
(14)
5,327
2,690
896
$ 1,794
$ 893
1.86%
21.35
63.91
$ 36,640
272,942
66,095
8,404
33,899 29,104
307,451 225,839
79,376 58,504
Total Revenue was $9.0 billion, reflecting a$715 million, or nine per-
cent, increase in 2004. The increase in Market-based revenues was
driven by trading-related revenue and Investment Banking Income.
The Provision for Credit Losses decreased $762 million to a negative
$459 million. Total Noninterest Expense increased $1.2 billion to
$6.6 billion. Net Income increased $156 million, or nine percent. SVA
was relatively flat in 2004.
Net Interest Income decreased $167 million, or four percent, to
$4.1 billion. Driving this decrease was the $200 million, or nine per-
cent, decrease in trading-related Net Interest Income. Despite the
growth in trading-related average earning assets during the year, a
flattening yield curve decreased the contribution to Net Interest
Income. Nontrading-related Net Interest Income increased $33 million,
or two percent, as the benefit of the $10.8 billion, or 16 percent,
increase in average Deposits was partially offset by the $2.4 billion,
or seven percent, decrease in average Loans and Leases. Average
Deposits increased despite the withdrawal of compensating balances
by the U.S. Treasury due to changes in our compensation agreements
with them.
Noninterest Income increased $882 million, or 22 percent.
Increases in Trading Account Profits, Investment Banking Income and
Service Charges drove the improvement. The following table presents
the detail of Investment Banking Income within the segment.
Investment Banking Income
(D011ars in millions) 2004 2003
Securities undenvriting $ 920 $ 962
Syndications 521 407
Advisory services 310 229
Other 32 38
---------- - -- -----
Total Investment Banking Incomecl� $1,783 $1,636
(11 Investment Banking Income recordetl in other business units in 2004 and 2003 was $103
antl $100.
Investment Banking Income increased $147 million, or nine percent,
due to market share increases in high-yield debt, mortgage-backed
securities and convertible debt. The continued strong momentum in
mergers and acquisitions, and syndicated loans drove the 35 percent
and 28 percent increases, respectively, in advisory services and
syndication fees.
Trading-related revenue, which includes Net Interest Income
from trading-related positions and Trading Account Profits in
Noninterest Income, is presented in the following table. Not included
are commissions from equity transactions which are recorded in
Noninterest Income as Investment and Brokerage Services Income.
Trading-related Revenue
(D011ars in mllllons) 2004 2003
Net interest income (fully taxable-equivalent basis) $ 2,039 $ 2,239
Trading account profits�l� 1,028 587
Total trading-related revenuetl� $ 3,067 $ 2,826
7rading-related revenue by product
Fixed income $ 1,547 $ 1,352
Interest rate (fully taxable-equivalent basis) 667 954
Foreign exchange 757 551
Equities�2� 195 344
Commodities 45 (45)
Market-based trading-related revenue 3,211 3,156
Credit portfolio hedges�3� (144) (330)
Total trading-related revenue�1� $ 3,067 $ 2,826
(11 Trading Account Profts for the Corporation were $869 and $409 for 2004 and 2003. In 2004,
the difference relates to the impact of the valuation of the Certificates, which was partialty off-
set by gains in Global Weal[h and Investment Management antl La[in America of $86 antl $72,
respectively. In 2003, the difference relates primarily to the impact of the Certificates. See page
44 for more information on the Certificates. Total trading-related revenue for the Corporetion
was $2,908 and $2,648 for 2004 and 2003, and was impacted in a similar manner as Trading
Account Profits.
�21 Does not include commissions from equity transactions which were $666 and $648 in 2004
antl 2003.
(31 Includes credit default swaps antl related products usetl for credit risk managemen[.
Market-based trading-related revenue increased by $55 million, or
two percent. Fixed income continued to show strong results
increasing $195 million, or 14 percent, driven by growth in our com-
mercial mortgage-backed and structured finance activity. Foreign
exchange revenue increased $206 million, or 37 percent, due to
volatility of the dollar in the latter half of the year and increased
customer activity. Commodities revenue increased $90 million due
to the absence of the negative impact of the SARS outbreak, which
occurred during 2003.
BANK OF AMERICA 2004 47
�
�
u
.
�
•
Partially offsetting these increases were declines in interest rate
and equities revenues. Interest rate revenues declined by $287 million,
or 30 percent, largely due to reduced corporate customer activity and
lower trading-related profits as a result of FRB tightening, uncertainty
related to the election, declining volatility in the options market and
more subdued economic growth than anticipated during the year.
Trading-related equities revenues declined by $149 million, or 43 percerrt.
Including commissions on equity transactions, trading-related equities
revenues declined $131 million, or 13 percent. The overall decline in
trading-related equities revenue was driven by net losses on a single
retained stock position in 2004 combined with the absence of gains
on a single position that we recorded in 2003.
Total trading-related revenues also included the cost associated
with credit portfolio hedges of $144 million in 2004, an improvement
of $186 million. The improvement was primarily due to stable
spreads in the first half of the year versus spreads tightening
throughout 2003.
The Provision for Credit Losses decreased $762 million to a
negative $459 million due to notable improvements in credit quality
in the large corporate portfolio partially due to the high levels of
liquidity in the capital markets, which enabled us to distribute paper
more readily. Also contributing to the decrease in the Provision for
Credit Losses was the reduction in net charge-offs of $311 million, or
71 percent. Additionally, nonperforming assets declined $589 million,
or 58 percent, to $424 million at December 31, 2004. For more
information, see Credit Risk Management beginning on page 58.
Noninterest Expense increased $1.2 billion, or 23 percent. This
increase was due, in part, to an increase in litigation-related charges
of $460 million, including the reversal of legal expenses previously
recorded in All Other that were reclassified to this segment. Also
impacting Noninterest Expense were higher incentive compensation
for market-based activities of $279 million and the mutual fund
settlement of $143 mil�ion.
Global Wealth and Investment Management
This segment provides tailored investment services to individual and
institutional clients in various stages and economic cycles. Our
clients are served through five major businesses, Premier Banking,
Banc of America Investments (BAI), The Private Bank, Columbia
Management Group (CMG) and Other Services, each offering specific
products and services based on clients' needs.
Premier Banking joins with BAI, our full-service retail brokerage
business, to bring together personalized banking and investment
expertise through priority service with client-dedicated teams. These
teams provide comprehensive advice, cash management strategies,
and customized investment and financial planning solutions for mass
affluent clients. Mass affluent clients have a personal wealth profile
that includes investable assets plus a mortgage that exceeds
$250,000 or they have at least $100,000 of investable assets.
48 BANK OF AMERICA 2004
BAI serves 1.3 million accounts through a network of over
2,100 financial advisors throughout the U.S.
The Private Bank provides integrated wealth management solu-
tions to high-net-worth individuals, mid-market institutions and chari-
table organizations with investable assets greater than $3 million.
Services include investment, trust, banking and lending services.
During the third quarter of 2004, we announced a new business
designed to serve the needs of ultra high-net-worth individuals and
families. The goal is for this new business to provide a higher level
of contact and tailored wealth management solutions to clients with
investable assets greater than $50 million. We expect this business
to be rolled out during the first quarter of 2005.
CMG is an asset management organization primarily serving the
needs of institutional customers. CMG provides asset management
services, liquidity strategies and separate accounts. CMG also provides
mutual funds offering a full range of investment styles across an array
of products including equities, fixed income (taxable and nontaxable)
and cash products. In addition to its service of institutional clients,
CMG distributes its products and services to individuals through
The Private Bank, BAI and nonproprietary channels including other
brokerage firms.
Other Services include the Investment Services Group, which
provides products and services from traditional capital markets
products to alternative investments and Banc ofAmerica Specialist, a
New York Stock Exchange market-maker. Other Services also included
U.S. Clearing which provides retail clearing services to broker/dealers
and other correspondent firms. U.S. Clearing was sold in the fourth
quarter of 2004.
Global Wealth and Investment Management
(Dollars In mllllons)
Net interest income (fully taxable-equivalent basis)
Noninterest income
Total revenue
Provision for credit losses
Noninterest expense
Income before income taxes
Income tax expense
Net income
Shareholder value added
Net interest yield (fully taxable-equivalent basis)
Return on average equity
Efficiency ratio (fully taxable-equivalent basis)
Average:
Total loans and leases
Total assets
Total deposits
Common equity/Allocated equity
Year end:
Total loans and leases
Total assets
Total deposits
2ooa
$ 2,854
3,064
5,918
(20)
3,449
2,489
905
$ 1,584
$ 782
3.35%
20.17
58.28
2003
$ 1,952
2,078
4,030
11
2,101
1,918
684
$ 1,234
$ 854
3.52%
33.94
52.11
$ 44,049 $ 37,675
91,443 58,606
83,049 53,996
7,854 3,637
49,776 38,689
121,974 69,370
111,107 62,730
Total Revenue for Global Wealth and Investment Management
increased $1.9 billion, or 47 percent, for 2004. The Provision for
Credit Losses decreased $31 million to a negative $20 million. Total
Noninterest Expense increased $1.3 billion to $3.4 billion. Net Income
increased 28 percent to $1.6 billion. SVA decreased $72 million, or eight
percent, as the increase in cash basis earnings was more than offset
by the increase in the capital allocation that resulted from the Merger.
Net Interest Income increased 46 percent to $2.9 biifion due to
growth in Deposits in both Premier Banking and The Private Bank,
loan growth in The Private Bank, and the addition of FleetBoston earn-
ing assets to the portfolio. Net results of ALM activities also drove
the increase. Average Deposits increased $29.1 billion, or 54 percent,
primarily due to migration of account balances from Consumer
Banking to Premier Banking, the impact of the Merger, as well as
increased deposit-taking in The Private Bank. Average Loans and
Leases increased $6.4 billion, or 17 percent, due to the inclusion of
the FleetBoston Loans and Leases and increased loan activity in The
Private Bank.
Client Assets
December 31
(Dollars in billions) 2004 2003
Assets under management $ 451.5 $ 296.7
Client brokerage assets 149.9 88.8
Assets in custody 107.0 49.9
Total client assets $ 708.4 $ 435.4
Assets under management generate fees based on a percentage of
their market value. They consist largely of mutual funds and separate
accounts, which are comprised of money market products, equities,
and taxable and nontaxable fixed income securities. Compared to
2003, assets under management increased $154.8 billion, or 52 per-
cent, due to the addition of $148.9 billion of FleetBoston assets under
management and increased market valuation partially offset by out-
flows primarily in money market products. Client brokerage assets, a
source of commission revenue, were up $61.1 billion, or 69 percent,
due to the addition of $55.4 billion FleetBoston client brokerage
assets. Client brokerage assets consist largely of investments in
annuities, money market mutual funds, bonds and equities. Assets in
custody increased $57.1 billion, or 114 percent, and represent trust
assets administered for customers. The addition of $54.5 billion of
assets in custody from FleetBoston drove the increase. Trust assets
encompass a broad range of asset types including real estate, private
company ownership interest, personal property and investments.
Noninterest Income consists primarily of Investment and
Brokerage Services, which represents fees earned on client assets,
as well as brokerage commissions and trailer fees. Investment and
Brokerage Services revenue increased $1.1 billion, or 71 percent, to
$2.7 billion. The increase in Investment and Brokerage Services
revenue was primarily due to growth in all client assets categories,
driven by the addition of FleetBoston. The impact of FleetBoston on
Investment and Brokerage Services was $974 million.
Noninterest Expense increased $1.3 billion, or 64 percent, due
to the $889 million increase in expenses related to the inclusion of
FleetBoston and this segmenYs allocation of the mutual fund settle-
ment, which amounted to approximately $143 million pre-tax. Also
impacting Noninterest Expense was an increase in Personnel
Expense reflecting the addition of 637 client managers in Premier
Banking, additional financial advisors in BAI and increased incentives
in BA1 due to increased sales and changes to payout schedules.
All Other
Included in All Other are our Latin America and Equity Investments
businesses, and Other.
LatinAmerica includes our full-service Latin American operations
in Brazil, Argentina and Chile. These businesses provide a wide array
of products to indigenous and multinational corporations, as well as
consumers. These services include lending, deposit-taking, asset
management, private banking and treasury operations. The consumer
business focuses on the affluent and middle-market segments. Our
largest book of business is in Brazil, while Argentina has our largest
branch network, with 87 branches. Our Brazilian and Chilean opera-
tions have 65 branches and 43 branches, respectively. Beginning in
2005, Latin America will be re-aligned with the Global Business and
Financial Services segment. For more information on our Latin
American operations, see Foreign Portfolio beginning on page 64.
Epuity Investments include Principal Investing and other corporate
investments. Principal Investing is comprised of a diversified portfolio
of investments in privately-held and publicly-traded companies at all
stages of their lifecycle from start-up to buyout.
Other includes Noninterest Income and Expense amounts
associated with the ALM process, including Gains on Sales of Debt
Securities, the allowance for credit losses process, the residual
impact of inethodology allocations, intersegment eliminations, and
the results of certain consumer finance and commercial lending busi-
nesses that are being liquidated.
All Other
(Dollars in millions) 2004 2003
Net interest income (fully taxable-equivalent basis) $ 636 $ 634
Noninterest income 428 112
Total revenue 1,064 746
Provision for credit losses 148 389
Gains on sales of debt securities 2,016 942
Merger and restructuring charges 618 -
Noninterest expense 594 597
Income before income taxes 1,720 702
Income tax expense 492 97
Net income $ 1,228 $ 605
Shareholder value added $ 36 $ (1,339)
BANK OF AMERICA 2004 49
•
�
u
•
•
�
•
Latin America
The results of Latin America are driven by the addition of the
FleetBoston operations in the region. For more information on our
Latin American operations, see Foreign Portfolio beginning on page
64. Prior to the Merger, our business in the region had been reduced
to very low levels. For 2004, Latin America reported Net Income of
$310 million compared to a Net Loss of $48 million in 2003. Total
Revenue increased $801 million from $33 million to $834 million.
The results reflect an improvement in credit quality including the dis-
position of problem assets, as well as improved economic conditions
in the region. Our increased presence in the region as a result of the
addition of the FleetBoston business also contributed to the results.
SVA increased by $227 million due to higher Net Income.
Net Interest Income increased $470 million from $24 million to
$494 million. The increase was driven by the $458 million impact of
the addition of the FleetBoston Latin America business.
Noninterest Income increased $331 million from $9 million to
$340 million in 2004. The increase was driven by increases in Service
Charges, Investment and Brokerage Services and Trading Account
Profits of $78 million, $77 million and $72 million, respectively, due
to the addition of FleetBoston.
The Provision for Credit Losses decreased $284 million from
$89 million in 2003 to a negative $195 million, due to continued
improvement in the credit quality of the portfolio. Driving this
decrease was a reduction in net charge-offs of $113 million and
improved credit quality.
Noninterest Expense increased $509 million from $19 million to
$528 million for 2004 due to the $497 million impact of the addition
of the FleetBoston business.
Equity Investments
Equity Investments reported Net Income of $192 million in 2004, a
$441 million improvement compared to a$249 million Net Loss in
2003. Total Revenue increased $696 million to $440 million. The
improvements were primarily due to higher gains in Principal Investing
driven by increasing liquidity in the private equity markets. SVA increased
by $364 million, or 77 percent, due to the improvement in the results.
The following table presents the Principal Investing equity port-
folio by major industry at December 31, 2004 and 2003:
50 BANK OF AMERICA 2004
Principal Investing Equity Portfolio
December 31 FleetBoston
(Dollars in millions) 2004 2003 April 1, 2004
Consumer discretionary $ 2,058 $ 1,435 $ 834
Industrials 1,118 876 527
Information technology 1,089 741 391
Telecommunication services 769 639 271
Financials 606 332 146
Healthcare 576 385 211
Materials 421 266 188
Consumer staples 230 245 88
Real estate 229 229 113
Energy 81 29 67
Individual trusts,
nonprofits, government 49 48 162
Utilities 24 35 6
Total $ 7,250 $ 5,260 $ 3,004
Noninterest Income within the Principal Investing portfolio primarily
consists of Equity Investment Gains (Losses), and increased $712
million to $594 million. While impairments were relatively unchanged
at $445 million, cash gains increased by $576 million to $849 million.
Also contributing to the improvement was an increase of $143 million
in fair value adjustment gains.
O[her
Other recorded $726 million of Net Income in 2004, compared to
$902 million in 2003. Total Revenue decreased $1.2 billion to a
negative $210 million. The decrease was the result of a$440 million
decrease in Net Interest Income, from $771 million to $331 million,
primarily caused by a reduction of capital in Other, as more capital
has been deployed to the business segments, and by the continued
runoff of previously exited businesses. The revenue decrease was
also caused by the $739 million decline in Noninterest Income pri-
marily caused by the absence of whole mortgage loan sale gains dur-
ing 2004. Gains on Sales of Debt Securities increased $1.1 billion to
$2.0 billion as we continue to reposition the ALM portfolio in
response to interest rate fluctuations and to manage mortgage pre-
payment risk. Provision for Credit Losses increased $65 million
resulting from higher ALM whole loan mortgage portfolio levels,
changes to components of the formula and other factors, partially offset
by reduced credit costs associated with previously exited businesses.
Noninterest Expense increased $87 million to $555 million, and
included Merger and Restructuring Charges of $618 million offset by
costs allocated to the segments. For more information on Merger and
Restructuring Charges, see Note 2 of the Consolidated Financial
Statements.
Managing Risk
Overview
Our management governance structure enables us to manage all
major aspects of our business through an integrated planning and
review process that includes strategic, financial, associate and risk
planning. We derive much of our revenue from managing risk from
customer transactions for profit. Through our management gover-
nance structure, risk and return are evaluated with a goal of produc-
ing sustainable revenue, reducing earnings volatility and increasing
shareholder value. Our business exposes us to the following major
risks: strategic, liquidity, credit, market and operational.
Strategic risk is the risk that adverse business decisions,
ineffective or inappropriate business plans or failure to respond to
changes in the competitive environment, business cycles, customer
preferences, product obsolescence, execution and/or other intrinsic
risks of business will impact our ability to meet our objectives.
Liquidity risk is the inability to accommodate liability maturities and
deposit withdrawals, fund asset growth and meet contractual obliga-
tions through unconstrained access to funding at reasonable market
rates. Credit risk is the risk of loss arising from a borrower's or coun-
terparty's inability to meet its obligations. Market risk is the risk that
values of assets and liabilities or revenues will be adversely affected
by changes in market conditions, such as interest rate movements.
Operational risk is the risk of loss resulting from inadequate or failed
internal processes, people and systems or external events.
Risk Management Processes and Methods
We have established control processes and use various methods to align
risk-taking and risk management throughout our organization. These
control processes and methods are designed around "three lines of
defense": lines of business; support units (including Risk Management,
Compliance, Finance, Personnel and Legal); and Corporate Audit.
Management is responsible for identifying, quantifying, mitigating
and managing all risks within their lines of business, while certain
enterprise-wide risks are managed centrally. For example, except for
trading-related business activities, interest rate risk associated with
our business activities is managed centrally in the Corporate Treasury
function. Line of business management makes and executes the busi-
ness plan and is closest to the changing nature of risks and, therefore,
we believe is best able to take actions to manage and mitigate those
risks. Our lines of business prepare quarterly self-assessment
reports to identify the status of risk issues, including mitigation
plans, if appropriate. These reports roll up to executive management
to ensure appropriate risk management and oversight, and to identify
enterprise-wide issues. Our management processes, structures and
policies aid us in complying with laws and regulations and provide
clear lines for decision-making and accountability. Wherever practical,
we attempt to house decision-making authority as close to the
customer as possible while retaining supervisory control functions
from both in and outside of the lines of business.
The Risk Management organization translates approved business
plans into approved limits, approves requests for changes to those lim-
its, approves transactions as appropriate, and works closely with lines of
business to establish and monitor risk parameters. Risk Management
has assigned a Risk Executive to each of the four lines of business who
is responsible for the oversight of all risks associated with that line of
business. In addition, Risk Management has assigned Risk Executives to
monitor enterprise-wide credit, market and operational risks.
Corporate Audit provides an independent assessment of our
management and internal control systems. Corporate Audit activities
are designed to provide reasonable assurance that resources are
adequately protected; significant financial, managerial and operating
information is materially complete, accurate and reliable; and employ-
ees' actions are in compliance with corporate policies, standards,
procedures, and applicable laws and regulations.
We use various methods to manage risks at the line of business
levels and corporate-wide. Examples of these methods include plan-
ning and forecasting, risk committees and forums, limits, models,
and hedging strategies. Planning and forecasting facilitates analysis
of actual versus planned results and provides an indication of unan-
ticipated risk level. Generally, risk committees and forums are com-
prised of line of business, risk management, compliance, legal and
finance personnel, among others, who actively monitor perFormance
against plan, limits, potential issues, and introduction of new prod-
ucts. Limits, the amount of exposure that may be taken in a product,
relationship, region or industry, seek to align risk goals with those of
each line of business and are part of our overall risk management
process to help reduce the volatility of market, credit and operational
losses. Models are used to estimate market value and net interest
income sensitivity, and to estimate both expected and unexpected
losses for each product and line of business, where appropriate.
Hedging strategies are used to manage the risk of borrower or
counterparty concentration risk and to manage market risk in the
portfolio.
The formal processes used to manage risk represent only one
portion of our overall risk management process. Corporate culture
and the actions of our associates are also critical to effective risk
management. Through our Code of Ethics, we set a high standard for
our associates. The Code of Ethics provides a framework for all of our
associates to conduct themselves with the highest integrity in the
delivery of our products or services to our customers. We instill a
risk-conscious culture through communications, training, policies,
procedures, and organizational roles and responsibilities.
Additionally, we continue to strengthen the linkage between the asso-
ciate performance management process and individual compensation
to encourage associates to work toward corporate-wide risk goals.
BANK OF AMERICA 2004 51
C�
�
� i
�
s
/ 1
�
•
Oversight
The Board evaluates risk through the Chief Executive Officer (CEO)
and three committees. The Finance Committee, a committee
appointed by the Board, establishes policies and strategies for man-
aging the strategic, liquidity, credit, market and operational risks to
corporate earnings and capital. The Asset Quality Committee, a
Board committee, reviews credit and selected market risks; and the
Audit Committee, a Board committee, provides direct oversight of
the corporate audit function and the independent registered public
accounting firm. Additionally, senior management oversight of our
risk-taking and risk management activities is conducted through three
senior management committees: the Risk and Capital Committee
(RCC), the Asset and Liability Committee (ALCO) and the Credit Risk
Committee (CRC). The RCC, a senior management committee,
reviews corporate strategies and corporate objectives, evaluates
business performance, and reviews business plans, including capital
allocation, for the Corporation and for major businesses. The ALCO,
a subcommittee of the Finance Committee, approves limits for trad-
ing activities, and was established to manage the risk of loss of value
and related Net Interest Income of our trading positions. ALCO also
provides oversight for Corporate Treasury's and Corporate
Investment's process of managing interest rate risk, othenvise known
as the ALM process, and reviews hedging techniques. In addition,
ALCO provides oversight guidance over our credit hedging program.
The CRC, a subcommittee of the Finance Committee, establishes cor-
porate credit practices and limits, including industry and country con-
centration limits, approval requirements and exceptions. The CRC
also reviews business asset quality results versus plan, portfolio
management, and the adequacy of the ailowance for credit losses.
Each committee and subcommittee has the ability to delegate author-
ity to officers of subcommittees to manage specific risks.
Management is in the process of finalizing its plans to address
the Basel Committee on Banking Supervision's new risk-based capital
standards (Basel II). The Finance Committee and the Audit
Committee provide oversight of management's plans including the
Corporation's preparedness and compliance with Basel II. For additional
information, see Note 14 of the Consolidated Financial Statements.
In 2005, the Finance Committee chartered the Compliance and
Operational Risk Committee (CORC) as a subcommittee of the
Finance Committee. CORC provides oversight and consistent com-
munication of operational and compliance issues.
The following sections, Strategic Risk Management, Liquidity
Risk Management, Credit Risk Management beginning on page 58,
Market Risk Management beginning on page 72 and Operational
Risk Management on page 78, address in more detail the specific
procedures, measures and analyses of the major categories of risk
that we manage.
52 BANK OF AMERICA 2004
Strategic Risk Management
The Board provides oversight for strategic risk through the CEO and the
Finance Committee. We use an integrated business planning process to
help manage strategic risk. A key component of the planning process
aligns strategies, goals, tactics and resources. The process begins with
an assessment that creates a plan for the Corporation, setting the cor-
porate strategic direction. The planning process then cascades through
the business units, creating business unit plans that are aligned with the
Corporation's direction. Tactics and metrics are monitored to ensure
adherence to the plans. As part of this monitoring, business units per-
form a quarterly selfassessment further described in the Operational
Risk Management section on page 78. This assessment looks at chang-
ing market and business conditions, and the overatl risk in meeting objec-
tives. Corporate Audit in turn monitors, and independently reviews and
evaluates the plans and selfassessments.
One of the key tools for managing strategic risk is capital allo-
cation. Through allocating capital, we effectively manage each busi-
ness segmenYs ability to take on risk. Review and approval of
business plans incorporates approval of capital allocation, and eco-
nomic capital usage is monitored through financial and risk reporting.
Liquidity Risk Management
Liquidity is the ongoing ability to accommodate liability maturities and
deposit withdrawals, fund asset growth and business operations, and
meet contractual obligations through unconstrained access to fund-
ing at reasonable market rates. Liquidity management involves fore-
casting funding requirements and maintaining sufficient capacity to
meet the needs and accommodate fluctuations in asset and liability
levels due to changes in our business operations or unanticipated
events. Sources of liquidity include deposits and other customer-
based funding, wholesale market-based funding, and liquidity pro-
vided by the sale or securitization of assets.
We manage liquidity at two levels. The first is the liquidity of the
parent company, which is the holding company that owns the banking
and nonbanking subsidiaries. The second is the liquidity of the banking
subsidiaries. The management of liquidity at both levels is essential
because the parent company and banking subsidiaries each have
different funding needs and sources, and each are subject to certain
regulatory guidelines and requirements. Through ALCO, the Finance
Committee is responsible for establishing our liquidity policy as well as
approving operating and contingency procedures, and monitoring liquidity
on an ongoing basis. Corporate Treasury is responsible for planning and
executing our funding activities and strategy.
In order to ensure adequate liquidity through the full range of
potential operating environments and market conditions, we conduct
our liquidity management and business activities in a manner that
will preserve and enhance funding stability, flexibility, and diversity.
Key components of this operating strategy include a strong focus on
customer-based funding, maintaining direct relationships with whole-
sale market funding providers, and maintaining the ability to liquefy
certain assets when, and if requirements warrant.
We develop and maintain contingency funding plans for both the
parent company and bank liquidity positions. These plans evaluate our
liquidity position under various operating circumstances and allow us
to ensure that we would be able to operate through a period of stress
when access to normal sources of funding is constrained. The plans
project funding requirements during a potentia� period of stress, specify
and quantify sources of liquidity, outline actions and procedures for
Table 4 Credit Ratings
effectively managing through the problem period, and define roles and
responsibilities. They are reviewed and approved annually by ALCO.
Our borrowing costs and ability to raise funds are directly
impacted by our credit ratings. The credit ratings of Bank of America
Corporation and Bank of America, National Association (Bank of
America, N.A.) and Fleet National Bank are reflected in the table below.
December 31, 2004
Bank of America Corporation Bank of America, N.A. Fleet National Bank
Senior Subordinated Commercial Shortterm Long-term Short�erm Longterm
Debt Debt __ Paper ------_- --Borrowings -- Debt __ Borrowings Debt
Moody's Aa2 Aa3 P-1 P-1 Aa1 P-1 Aa1
Standard & Poor's A+ A A-1 A-1+ AA- A-1+ AA-
Fitch, Inc. AA- A+ F1+ F1+ AA- F1+ AA-
On February 1, 2005, Standard & Poor's raised its credit ratings on
Bank of America Corporation and its subsidiaries to AA- on senior
debt, A+ on subordinated debt and A-1+ on commercial paper; Bank
of America, N.A. to AA on long-term debt; and Fleet National Bank to
AA on long-term debt.
Under normal business conditions, primary sources of funding
for the parent company include dividends received from its banking
and nonbanking subsidiaries, and proceeds from the issuance of sen-
ior and subordinated debt, as well as commercial paper and equity.
Primary uses of funds for the parent company include repayment of
maturing debt and commercial paper, share repurchases, dividends
paid to shareholders, and subsidiary funding through capital or debt.
The parent company maintains a cushion of excess liquidity that
would be sufficient to fully fund holding company and nonbank a�liate
operations for an extended period during which funding from normal
sources is disrupted. The primary measure used to assess the parent
company's liquidity is the "Time to Required Funding" during such a
period of liquidity disruption. This measure assumes that the parent
company is unable to generate funds from debt or equity issuance,
receives no dividend income from subsidiaries, and no longer pays div-
idends to shareholders while continuing to meet nondiscretionary
uses needed to maintain bank operations and repayment of contrac-
tual principal and interest payments owed by the parent company and
affiliated companies. Under this scenario, the amount of time the par-
ent company and its nonbank subsidiaries can operate and meet all
obligations before the current liquid assets are exhausted is consid-
ered the "Time to Required Funding". ALCO approves the target range
set for this metric, in months, and monitors adherence to the target.
Maintaining excess parent company cash that ensures that "Time to
Required Funding" remains in the target range is the primary driver of
the timing and amount of the Corporation's debt issuances. As of
December 31, 2004 "Time to Required Funding" was 29 months.
Primary sources of funding for the banking subsidiaries include
customer deposits, wholesale market-based funding, and asset secu-
ritizations. Primary uses of funds for the banking subsidiaries include
repayment of maturing obligations, and growth in the ALM and core
asset portfolios, including loan demand.
ALCO determines prudent parameters for wholesale market-based
borrowing and regularly reviews the funding plan for the bank sub-
sidiaries to ensure compliance with these parameters. The contingency
funding plan for the banking subsidiaries evaluates liquidity over a
12-month period in a variety of business environment scenarios
assuming different levels of earnings perFormance and credit ratings
as well as public and investor relations factors. Funding exposure
related to our role as liquidity provider to certain off-balance sheet
financing entities is also measured under a stress scenario. In this
analysis, ratings are downgraded such that the off-balance sheet
financing entities are not able to issue commercial paper and backup
facilities that we provide are drawn upon. In addition, potential draws
on credit facilities to issuers with ratings below a certain level are
analyzed to assess potential funding exposure.
One ratio used to monitor the stability of our funding composition is
the "loan to domestic deposit" (LTD) ratio. This ratio reflects the percent
of Loans and Leases that are funded by domestic customer deposits, a
relatively stable funding source. A ratio below 100 percent indicates that
our loan portfolio is completely funded by domestic customer deposits.
The ratio was 93 percent for 2004 compared to 98 percent for 2003.
For further discussion, see Deposits and Other Funding Sources on
page 54.
We originate loans both for retention on our Balance Sheet and
for distribution. As part of our "originate to distribute" strategy,
commercial loan originations are distributed through syndication
structures, and residential mortgages originated by Consumer Real
BANK OF AMERICA 2004 53
•
�
•
�
�
•
Estate are frequently distributed in the secondary market. In connection
with our balance sheet management activities, we may retain mortgage
loans originated as well as purchase and sell loans based on our
assessment of market conditions.
Deposits and Other Funding Sources
Deposits are a key source of funding. Table I on page 84 provides
information on the average amounts of deposits and the rates paid
by deposit category. Average Deposits increased $145.3 billion to
$551.6 billion due to a$97.9 billion increase in average domestic
interest-bearing deposits, a$31.1 billion increase in average nonin-
terest-bearing deposits and a$16.3 billion increase in average
foreign interest-bearing deposits. These increases included the
$71.0 billion, $25.3 billion and $5.5 billion impact of the addition of
FleetBoston domestic interest-bearing deposits, noninterest-bearing
deposits and foreign interest-bearing deposits, respectively. We
categorize our deposits into either core or market-based deposits.
Core deposits, which are generally customer-based, are an important
stable, low-cost funding source and typically react more slowly to
interest rate changes than market-based deposits. Core deposits
exctude negotiable CDs, public funds, other domestic time deposits
and foreign interest-bearing deposits. Average core deposits
increased $130.7 billion to $494.1 billion, a 36 percent increase
from a year ago, which included $95.6 billion in average core
deposits from the addition of FleetBoston. The increase was distrib-
uted between NOW and money market deposits, noninterest-bearing
deposits, consumer CDs and IRAs, and savings. Average market-
based deposit funding increased $14.6 billion to $57.5 billion. The
increase was due to a$16.3 billion increase in foreign interest-bearing
deposits offset by a$1.7 billion decrease in negotiable CDs, public
funds and other domestic time deposits. These increases also
reflected the $6.2 billion impact to average market-based deposit
funding from the addition of FleetBoston market-based deposit fund-
ing. Deposits, on average, represented 53 percent and 54 percent of
total sources of funds in 2004 and 2003, respectively.
`�'1,}Jle i Short-term Borrowings
(Dollars In millions)
Federalfunds purchased
At December 31
Average during year
Maximum month-end balance during year
Securities sold under agreements to repurchase
At December 31
Average during year
Maximum month-end balance during year
Commerclal paper
At December 31
Average during year
Maximum month-end balance during year
Other short-term borrowings
At December 31
Average during year
Maximum monthend balance during year
54 BANK OF AMERICA 2004
Table 5 summarizes average deposits by category.
Table 5 Average Deposits
(Dollars in mil�ions) 2004 2003
Deposits by type
Domestic interest-bearing:
Savings $ 33,959 $ 24,538
NOW and money market accounts 214,542 148,896
Consumer CDs and IRAs 94,770 70,246
Negotiable CDs and other time deposits 5,977 7,627
--- ------- --------------- ----
Total domestic interest-bearing 349,248 251,307
Foreign interest-bearing:
--------...------- ------
Banks located in foreign countries 18,426 13,959
Governments and official institutions 5,327 2,218
Time, savings and other 27,739 19,027
Total foreign interest-bearing 51,492 35,204
Total interest-bearing 400,740 286,511
Noninterest-bearing 150,819 119,722
Totat deposits $ 551,559 $ 406,233
Core and market-based deposits
Core deposits $ 494,090 $ 363,402
Market-based deposits 57,469 42,831
Total deposits $ 551,559 $ 406,233
Additional sources of funds include short-term borrowings, Long-term
Debt and Shareholders' Equity. Average short-term borrowings, a
relatively low-cost source of funds, were up $87.1 billion to $227.6 billion
due to increases in securities sold under agreements to repurchase
of $59.4 billion, commercial paper of $18.2 billion, notes payable of
$8.6 billion and other short-term borrowings of $2.9 billion. These
funds were used to fund asset growth or facilitate trading activities
and were partially offset by a decrease of $2.0 billion in federal funds
purchased. The increases in average short-term borrowings included
the $4.0 billion, $274 million, $18 million, and $1.1 billion impact of
the addition of FleetBoston securities sold under agreements to
repurchase, commercial paper, notes payable and other short-term
borrowings, respectively. Issuances and repayments of Long-term
Debt were $21.3 billion and $16.9 billion, respectively, for 2004.
2ooa
Amount Rate Amount
$ 3,108 2.32% $ 2,356
3,724 1.31 5,736
7,852 - 7,877
116,633 2.85 75,690
161,494 2.08 102,074
191,899 - 124,746
25,379 1.71 7,605
21,178 1.45 2,976
26,486 - 9,136
53,219 2.49 27,375
41,162 1.73 29,672
53,756 - 46,635
2003 2002
------- Rate---- - Amount----
0.84k $ 5,167
1.10 5,470
- 9,663
1.12 59,912
1.15 67,751
- 99,313
1.09 114
1.29 1,025
- 1,946
1.98 16,599
2.02 24,231
- 33,549
Rate
1.15%
1.63
1.44
1.73
1.20
1.73
1.29
2.90
Obligations and Commitments
We have contractual obligations to make future payments on debt
and lease agreements. Additionally, in the normal course of busi-
ness, we enter into contractual arrangements whereby we commit to
future purchases of products or services from unaffiliated parties.
Obligations that are legally binding agreements whereby we agree to
purchase products or services with a specific minimum quantity
defined at a fixed, minimum or variable price over a specified period
of time are defined as purchase obligations. Included in purchase
obligations are vendor contracts of $4.9 billion, commitments to pur-
chase securities of $3.3 billion and commitments to purchase loans
of $3.8 billion. The most significant of our vendor contracts include
communication services, processing services and software contracts.
Other long-term liabilities include our obligations related to the
Qualified Pension Plans, Nonqualified Pension Plans and
Postretirement Health and Life Plans (the Plans). Obligations to the
Plans are based on the current and projected obligations of the Plans,
performance of the Plans' assets and any participant contributions, if
applicable. During 2004 and 2003, we contributed $303 million and
$460 million, respectively, to the Plans, and we expect to make at
least $150 million of contributions during 2005. Management
believes the effect of the Plans on liquidity is not significant to our
overall financial condition. Debt and lease obligations are more fully
discussed in Note 11 of the Consolidated Financial Statements.
Table 7 presents total long-term debt and other obligations at December 31, 2004.
Z'able 7 Long-term Debt and Other Obligations
December 31, 2004
Due after Due after
Due in 1 year 3 years
1 year through through Due after
(D011ars in millions) or less 3 years 5 years 5 years Total
Long-term debt and capital leases�1� $ 9,511 $ 22,498 $ 17,298 $ 48,771 $ 98,078
Purchase obligations�2� 7,970 1,551 1,303 1,186 12,010
Operating lease obligations 1,373 2,136 1,543 3,384 8,436
Other long-term liabilities 151 - - - 151
Total $ 19,005 $ 26,185 $ 20,144 $ 53,341 $118,675
�1� Includes pnncipal payments only and capital lease obligations of $46.
�2� Obligations that are legally bintling agreements whereby we agree to purchase products or services with a specifc minimum quantiry tlefned at a fixetl, minimum or variable price over a specified periotl
of time are tlefined as purchase obligations.
Many of our lending relationships contain both funded and unfunded
elements. The funded portion is reflected on our Balance Sheet. The
unfunded component of these commitments is not recorded on our
Balance Sheet until a draw is made under the loan facility.
These commitments, as well as guarantees, are more fully
discussed in Note 12 of the Consolidated Financial Statements.
Table 8 Credit Extension Commitments
(D011ars in millions)
Loan commitments�11
Home equity lines of credit
Standby letters of credit and financial guarantees
Commercial letters of credit
Legally binding commitments
Credit card lines
Total
The following table summarizes the total unfunded, or off-balance
sheet, credit extension commitment amounts by expiration date. At
December 31, 2004, charge cards (nonrevolving card lines) to indi-
viduals and government entities guaranteed by the U.S. government
in the amount of $10.9 billion (related outstandings of $205 million)
were not included in credit card line commitments in the table below.
December 31, 2004
Expires after Expires after
Expires in 1 year 3 years
1 year through through Expires after
orless 3 years 5 years 5 years Total
$111,412 $ 63,528 $ 53,056 $ 19,098 $ 247,094
690 1,599 2,059 55,780 60,128
24,755 10,472 3,151 4,472 42,850
5,374 52 20 207 5,653
142,231 75,651 58,286 79,557 355,725
177,286 8,175 - - 185,461
$ 319,517 $ 83,826 $ 58,286 $ 79,557 $ 541,186
(1) Equity commitments of $2,052, of which $838 were acquired from FleetBoston, related to obligations to fund existing equity investments were included in loan commitments at December 31, 2004.
BANK OF AMERICA 2004 55
•
�
�
•
�
•
On- and Off-balance Sheet Financing Entities
Off-balance Sheet Commercial Paper Conduits
In addition to traditional lending, we also support our customers'
financing needs by facilitating their access to the commercial paper
markets. These markets provide an attractive, lower-cost financing
alternative for our customers. Our customers sell assets, such as
high-grade trade or other receivables or leases, to a commercial
paper financing entity, which in turn issues high-grade short-term
commercial paper that is collateralized by the assets sold.
Additionally, some customers receive the benefit ot commercial paper
financing rates related to certain lease arrangements. We facilitate
these transactions and collect fees from the financing entity for the
services it provides including administration, trust services and
marketing the commercial paper.
We receive fees for providing combinations of liquidity, standby
letters of credit (SBLCs) or similar loss protection commitments, and
derivatives to the commercial paper financing entities. These forms
of asset support are senior to the first layer of asset support pro-
vided by customers through over-collateralization or by support pro-
vided by third parties. The rating agencies require that a certain
percentage of the commercial paper entity's assets be supported by
both the seller's over-collateralization and our SBLC in order to
receive their respective investment rating. The SBLC would be drawn
on only when the over-collateralization provided by the seller is not
sufficient to cover losses of the related asset. Liquidity commitments
made to the commercial paper entity are designed to fund scheduled
redemptions of commercial paper if there is a market disruption or
the new commercial paper cannot be issued to fund the redemption
of the maturing commercial paper. The liquidity facility has the same
legal priority as the commercial paper. We do not enter into any other
form of guarantee with these entities.
We manage our credit risk on these commitments by subjecting
them to our normal underwriting and risk management processes. At
December 31, 2004 and 2003, the Corporation had off-balance sheet
liquidity commitments and SBLCs to these entities of $23.8 billion
and $21.6 billion, respectively. Substantially all of these liquidity com-
mitments and SBLCs mature within one year. These amounts are
included in Table 8. Net revenues earned from fees associated with
these off-balance sheet financing entities were approximately $80 million
and $72 million for 2004 and 2003, respectively.
From time to time, we may purchase some of the commercial
paper issued by certain of these entities for our own account or acting
as a dealer on behalf of third parties. Derivative instruments related
to these entities are marked to market through the Consolidated
Statement of Income. SBLCs are initially recorded at fair value in
accordance with Financial Accounting Standards Board (FASB)
Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees" (FIN 45). Liquidity commitments and
SBLCs subsequent to inception are accounted for pursuant to SFAS
No. 5, "Accounting for Contingencies" (SFAS 5), and are discussed
further in Note 12 of the Consolidated Financial Statements.
56 BANK OF AMERICA 2004
In January 2003, the FASB issued FASB Interpretation No. 46,
"Consolidation of Variable Interest Entities, an interpretation of ARB
No. 51" (FIN 46), which provides a framework for identifying variable
interest entities (VIEs) and determining when a company should
include the assets, liabilities, noncontrolling interests and results of
activities of a VIE in its consolidated financial statements. We
adopted FIN 46 on July 1, 2003 and consolidated approximately
$12.2 billion of assets and liabilities related to certain of our multi-
seller asset-backed commercial paper (ABCP) conduits. On October
8, 2003, one of these entities, Ranger Funding Company (RFC) (for-
merly known as Receivables Capital Corporation), entered into a
Subordinated Note Purchase Agreement (the Note) with an unrelated
third party which reduced our exposure to this entity's losses under
liquidity and credit agreements as these agreements are senior to
the Note. This Note was issued in the principal amount of $23 mil-
lion, an original maturity of five years and pays interest at 23 percent.
Proceeds from the issuance of the Note were deposited into a sepa-
rate account and may be used to cover losses incurred by RFC. Upon
RFC's issuance of this Note, we evaluated whether the Corporation
continued to be the primary beneficiary of RFC and determined that
the unrelated parry which purchased the Note absorbed over 50 per-
cent of the expected losses of RFC. We determined the amount of
expected loss through mathematical analysis utilizing a Monte Carlo
model that incorporates the cash flows from RFC's assets and utilizes
independent loss information. The noteholder is therefore the primary
beneficiary of and is required to consolidate the entity. As a result of
the sale of the Note, we deconsolidated approximately $8.0 billion of
the previously consolidated assets and liabilities of the entity. The
impact of this transaction on the Consolidated Statement of Income
was the reduction in Interest Income of approximately $1 million and
the reclassification of approximately $37 million from Net Interest
Income to Noninterest Income for 2003. At December 31, 2004, this
entity had total assets of $10.0 billion. Our exposure to this entity is
included in the total amount of liquidity agreements and SBLCs noted
above. There was no material impact to Net Income or Tier 1 Capital
as a result of the adoption of FIN 46 or the subsequent deconsoli-
dation of this entity, and prior periods were not restated. In December
2003, the FASB issued FASB Interpretation No. 46 (Revised
December 2003), "Consolidation of Variable Interest Entities, an
interpretation of ARB No. 51" (FIN 46R), which is an update of FIN
46. We adopted FIN 46R as of March 31, 2004. As a result of the
adoption of FIN 46R, there was no material impact on our results of
operations or financial condition.
On-balance Sheet Commercial Paper Conduits
In addition to the off-balance sheet financing entities previously
described, we also utilize commercial paper conduits that have been
consolidated based on our determination that we are the primary
beneficiary of the entities in accordance with FIN 46R. At December
31, 2004 and 2003, the consolidated assets and liabilities of these
conduits were reflected in AFS Securities, Other Assets, and
Commercial Paper and Other Short-term Borrowings in the Global
Capital Markets and Investment Banking business segment. At
December 31, 2004 and 2003, we held $7.7 billion and $5.6 billion,
respectively, of assets of these entities while our maximum loss expo-
sure associated with these entities, including unfunded lending com-
mitments, was approximately $9.4 billion and $7.6 billion,
respectively.
Qualified Special Purpose Entities
In addition, to control our capital position, diversify funding sources and
provide customers with commercial paper investments, we will, from
time to time, sell assets to off-balance sheet commercial paper enti-
ties. The commercial paper entities are Qualified Special Purpose
Entities (QSPEs) that have been isolated beyond our reach or that of
our creditors, even in the event of bankruptcy or other receivership. The
accounting for these entities is governed by SFAS 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities — a replacement of FASB Statement No. 125" (SFAS 140),
which provides that QSPEs are not included in the consolidated finan-
cial statements of the seller. Assets sold to the entities consist of high-
grade corporate or municipal bonds, collateralized debt obligations and
asset-backed securities. These entities issue collateralized commercial
paper or notes with similar repricing characteristics to third party mar-
ket participants and passive derivative instruments to us. Assets sold
to the entities typically have an investment rating ranging from Aaa/AAA
to Aa/AA. We may provide liquidity, SBLCs or similar loss protection
commitments to the entity, or we may enter into derivatives with the
entity in which we assume certain risks. The liquidity facility and deriv-
atives have the same legal standing with the commercial paper.
The derivatives provide interest rate, currency and a pre-specified
amount of credit protection to the entity in exchange for the com-
mercial paper rate. These derivatives are provided for in the legal doc-
uments and help to alleviate any cash flow mismatches. In some
cases, if an asset's rating declines below a certain investment qual-
ity as evidenced by its investment rating or defaults, we are no longer
exposed to the risk of loss. At that time, the commercial paper hold-
ers assume the risk of loss. In other cases, we agree to assume all
of the credit exposure related to the referenced asset. Legal docu-
ments for each entity specify asset quality levels that require the
entity to automatically dispose of the asset once the asset falls
below the specified quality rating. At the time the asset is disposed,
we are required to reimburse the entity for any credit-related losses
depending on the pre-specified level of protection provided.
We also receive fees for the services we provide to the entities,
and we manage any credit or market risk on commitments or deriva-
tives through normal underwriting and risk management processes.
Derivative activity related to these entities is included in Note 4 of the
Consolidated Financial Statements. At December 31, 2004 and
2003, the Corporation had off-balance sheet liquidity commitments,
SBLCs and other financial guarantees to the entities of $7.4 billion
and $7.3 billion, respectively. Substantially all of these liquidity com-
mitments, SBLCs and other financial guarantees mature within one
year. These amounts are included in Table 8. Net revenues earned
from fees associated with these entities were $61 million and $65
million in 2004 and 2003, respectively.
We generally do not purchase any of the commercial paper
issued by these types of financing entities other than during the
underwriting process when we act as issuing agent nor do we purchase
any of the commercial paper for our own account. Derivative instru-
ments related to these entities are marked to market through the
Consolidated Statement of Income. SBLCs are initially recorded at fair
value in accordance with FIN 45. Liquidity commitments and SBLCs
subsequent to inception are accounted for pursuant to SFAS 5 and are
discussed further in Note 12 ofthe Consolidated Financial Statements.
Credit and Lipuidity Risks
Because we provide liquidity and credit support to the commercial
paper conduits and QSPEs described above, our credit ratings and
changes thereto will affect the borrowing cost and liquidity of these
entities. In addition, significant changes in counterparty asset valua-
tion and credit standing may also affect the liquidity of the commer-
cial paper issuance. Disruption in the commercial paper markets may
result in our having to fund under these commitments and SBLCs dis-
cussed above. We seek to manage these risks, along with all other
credit and liquidity risks, within our policies and practices. See Notes
1 and 8 of the Consolidated Financial Statements for additional dis-
cussion of off-balance sheet financing entities.
Other Off-balance Sheet Financing Entities
To improve our capital position and diversify funding sources, we also
sell assets, primarily loans, to other off-balance sheet QSPEs that
obtain financing primarily by issuing term notes. We may retain a por-
tion of the investment grade notes issued by these entities, and we
may also retain subordinated interests in the entities which reduce
the credit risk of the senior investors. We may provide liquidity support
in the form of foreign exchange or interest rate swaps. We generally
do not provide other forms of credit support to these entities. In addi-
tion to the above, we had significant involvement with VIEs other than
the commercial paper conduits. These VIEs were not consolidated
because we will not absorb a majority of the expected losses or
expected residual returns and are therefore not the primary benefici-
ary of the VIEs. These entities are described more fully in Note 8 of the
Consolidated Financial Statements.
BANK OF AMERICA 2004 57
•
�
•
u
.
�
Capital Management
The final component of liquidity risk is capital management, which
focuses on the level of Shareholders' Equity. Shareholders' Equity
was $99.6 billion at December 31, 2004, an increase of $51.7 biilion
from December 31, 2003. This increase was driven by stock issued
for the acquisition of FleetBoston of $46.8 billion, Net Income of
$14.1 billion and Common Stock Issued Under Employee Plans and
Related Tax Benefits of $3.9 billion, offset by dividends paid of $6.5
billion and common share repurchases of $6.3 billion. For additional
information on common share repurchases, see Note 13 of the
Consolidated Financial Statements. We will continue to repurchase
shares, from time to time, in the open market or in private transac-
tions through our previously approved repurchase plans.
During the second quarter of 2004, the Board approved a 2-for-1
stock split in the form of a common stock dividend and increased the
quarterly cash dividend 12.5 percent from $0.40 to $0.45 per post-
split share. The common stock dividend was effective August 27,
2004 to common shareholders of record on August 6, 2004 and the
cash dividend was effective September 24, 2004 to common share-
holders of record on September 3, 2004. All prior period common
share and related per common share information has been restated
to reflect the 2-for-1 stock split.
As part of the SVA calculation, equity is allocated to business
units based on an assessment of risk. The allocated amount of capital
varies according to the risk characteristics of the individual business
segments and the products they offer. Capital is allocated separately
based on the following types of risk: credit, market and operational.
Average common equity allocated to business units was $69.3 billion
and $31.4 billion in 2004 and 2003, respectively. The increase in aver-
age allocated common equity was primarily due to the Merger. Average
unallocated common equity (not allocated to business units) was
$14.7 billion and $17.7 billion in 2004 and 2003, respectively.
As a regulated financial services company, we are governed by
certain regulatory capital requirements. The regulatory Tier 1 Capital
ratio was 8.10 percent at December 31, 2004, an increase of 25 bps
from a year ago, reflecting higher Tier 1 Capital partially offset by
higher risk-weighted assets. The minimum Tier 1 Capital ratio
required is four percent. As of December 31, 2004, we were classified
as "well�apitalized" for regulatory purposes, the highest classifica-
tion. For additional information on the regulatory capital ratios along
with a description of the components of risk-based capital, capital
adequacy requirements and prompt corrective action provisions, see
Note 14 of the Consolidated Financial Statements.
The capital treatment of trust preferred securities (Trust
Securities) is currently under review by the FRB due to the issuing
trust companies being deconsolidated under FIN 46R. On May 6,
2004, the FRB proposed to allow Trust Securities to continue to qualify
as Tier 1 Capital with revised quantitative limits that would be effective
after a three-year transition period. As a result, we will continue to
report Trust Securities in Tier 1 Capital. In addition, the FRB is
proposing to revise the qualitative standards for capital instruments
58 BANK OF AMERICA 2004
included in regulatory capital. The proposed quantitative limits and
qualitative standards are not expected to have a material impact to
our current Trust Securities position included in regulatory capital.
On July 28, 2004, the FRB and other regulatory agencies issued
the Final Capital Rule for Consolidated Asset-backed Commercial
Paper Program Assets (the Final Rule). The Final Rule allows compa-
nies to exclude from risk-weighted assets, the assets of consolidated
ABCP conduits when calculating Tier 1 and Total Risk-based Capital
ratios. The Final Rule also requires that liquidity commitments pro-
vided by the Corporation to ABCP conduits, whether consolidated or
not, be included in the capital calculations. The Final Rule was effec-
tive September 30, 2004. There was no material impact to Tier 1 and
Risk-based Capital as a result of the adoption of this rule.
Credit Risk Management
Credit risk is the risk of loss arising from a borrower's or counterparty's
inability to meet its obligations. Credit risk exists in our outstanding
loans and leases, derivatives, trading account assets and unfunded
lending commitments that include loan commitments, letters of
credit and financial guarantees. We define the credit exposure to
a borrower or counterparty as the loss potential arising from all prod-
uct cfassifications, including loans and leases, standby letters of
credit and financial guarantees, derivative and trading account
assets, assets held-for-sale and commercial letters of credit. For deriv-
ative positions, we use the current mark-to-market value to represent
credit exposure without giving consideration to future mark-to-market
changes. Our consumer and commercial credit extension and review
procedures take into account credit exposures that are both funded
and unfunded. For additional information on derivatives and credit
extension commitments, see Notes 4 and 12 of the Consolidated
Financial Statements.
We manage credit risk based on the risk profile of the borrower
or counterparty, repayment sources, the nature of underlying collateral,
and other support given current events and conditions. We classify
our Loans and Leases as either consumer or commercial and moni-
tor their credit risk separately as discussed below.
Consumer Portfolio Credit Risk Management
Credit risk management for the consumer portfolio begins with initial
underwriting and continues throughout a borrower's credit cycle.
Statistical techniques are used to establish product pricing, risk
appetite, operating processes and metrics to balance risks and
rewards. Consumer exposure is grouped by product and other attrib-
utes for purposes of evaluating credit risk. Statistical models are
built using detailed behavioral information from external sources
such as credit bureaus as well as internal historical experience.
These models are essential to our consumer credit risk management
process and are used, where applicable, in the determination of
credit decisions, collections management procedures, portfolio man-
agement decisions, determination of the allowance for consumer
loan and lease losses, and economic capital allocation for credit risk.
Table 9 presents outstanding consumer loans and leases for each year in the five-year period ending at December 31, 2004.
�.'able 9 Outstanding Consumer Loans and Leases
December 31 FleetBoston
2004 2003 2002 2001 2000 April 1, 2004
(D011ars in millions) Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
Residential mortgage $178,103 54.3°� $140,513 58.5% $108,197 54.8°� $ 78,203 47.3% $ 84,394 44.7% $ 34,571 55.2%
Credit card 51,726 15.8 34,814 14.5 24,729 12.5 19,884 12.0 14,094 7.5 6,848 10.9
Home equity lines 50,126 15.3 23,859 9.9 23,236 11.8 22,107 13.4 21,598 11.5 13,799 22.1
Direct/Indirect consumer 40,513 12.3 33,415 13.9 31,068 15.7 30,317 18.4 29,859 15.8 6,113 9.8
Other consumer(1� 7,439 2.3 7,558 3.2 10,355 5.2 14,744 8.9 38,706 20.5 1,272 2.0
Total consumer loans
and leases $327,907 100.0% $240,159 100.0% $197,585 100.0% $165,255 100.0% $188,651 100.0% $ 62,603 100.0%
�1� Inclutles consumer finance of $3,395, $3,905, $4,438, $5,331 antl $25,799 at December 31, 2004, 2003, 2002, 2001 and 2000, respectivery; foreign consumer of $3,563, $1,969, $1,970, $2,092
antl $2,308 at December 31, 2004, 2003, 2002, 2001 antl 2000, respectively; antl consumer lease financing of $481, $1,684, $3,947, $7,321 and $10,599 at December 31, 2004, 2003, 2002,
2001 and 2000, respectively.
Concentrations of Consumer Credit Risk
Our consumer credit risk is diversified through our geographic span,
diversity of our franchise and our product offerings. In addition, credit
decisions are statistically based with tolerances set to decrease the
percentage of approvals as the risk profile increases.
We purchase credit protection on certain portions of our con-
sumer portfolio. Beginning in 2003, we entered into several transac-
tions to purchase credit protection on a portion of our residential
mortgage loan portfolio. These transactions are designed to enhance
our overall risk management strategy. In 2004, we entered into a sim-
ilar transaction for a portion of our indirect automobile loan portfolio.
At December 31, 2004 and 2003, approximately $88.7 billion and
$63.4 billion of residential mortgage and indirect automobile loans
were credit protected. Our regulatory risk-weighted assets were
reduced as a result of these transactions because we transferred a
portion of our credit risk to unaffiliated parties. These transactions
had the cumulative effect of reducing our risk-weighted assets by
$25.5 billion and $18.6 billion at December 31, 2004 and 2003,
respectively, and resulted in 26 bp increases in our Tier 1 Capital
ratio at both December 31, 2004 and 2003.
Consumer Portfolio Credit Quality Performance
Credit card charge-offs increased in 2004 as a result of organic card
portfolio growth, continued seasoning of accounts and the return of
previously securitized loans to the balance sheet. Consumer credit
quatity remained strong in all other categories.
As presented in Table 10, nonperforming consumer loans and
leases increased $100 million to $738 million, and represented 0.23
percent of consumer loans and leases at December 31, 2004 com-
pared to $638 million, representing 0.27 percent of consumer loans
and leases at December 31, 2003. The increase in nonperforming
consumer loans and leases was driven by loan growth and the addi-
tion of $127 million of nonperforming consumer loans and leases on
April 1, 2004 related to FleetBoston, partially offset by consumer loan
sales of $95 million. Broad-based growth in the consumer portfolio
more than offset the increase in consumer nonperforming assets,
resulting in an improvement in the nonperforming ratios.
BANK OF AMERICA 2004 59
�
�
•
i
��
�
.
Table 10 Nonperforming Consumer Assets�l�
December 31 FleetBoston
(D011ars in millions)
2004 2003 2002 2001 2000 April 1, 2004
—_—_____.__—_—_--____._—_-______._.._.--_____._.__.--_____.._ ____
Nonperforming consumer loans and leases
Residential mortgage $ 554 $ 531 $ 612 $ 556 $ 551
Home equity lines 66 43 66 80 32
Direct/Indirect consumer 33 28 30 27 19
Other consumer 85 36 25 16 1,104
-- --- --- ----- ------ ------- - --- ----- --- ---- -._- .
Total nonperforming consumer loans and leases 738 638 733 679 1,706
Consumer foreclosed properties 69 81 99 334 182
--------- -------------- --
----------- -- --------- -------
Totalnonperformingconsumerassets�z� $ S07 $ 719 $ 832 $1,013 $1,888
Nonperforming consumer loans and leases as a percentage of
outstanding consumer loans and leases 0.23% 0.27% 0.37°� 0.41% 0.90%
Nonperforming consumer assets as a percentage of outstanding
consumer loans, leases and foreclosed properties 0.25 0.30 0.42 0.61 1.00
�11 In 2004, $40 in Interest Income was estimated to be contractually due on nonperforming consumer loans and leases. .
�27 Balances tlo not include $28, $16, $41, $646 and $0 of nonperforming consumer loans heldfor-sale, included in Other Assets at December 31, 2004, 2003, 2002, 2001 antl 2000, respectivery
Credit card loans are charged off at 180 days past due or 60 days
from notification of bankruptcy filing and are not classified as non-
performing. Unsecured consumer loans and deficiencies in non-real
estate secured loans and leases are charged off at 120 days past
due and not classified as nonperForming. Real estate secured con-
sumer loans are placed on nonaccrual and classified as nonperforming
at 90 days past due. The amount deemed uncollectible on real estate
secured loans is charged off at 180 days past due.
Table 11 presents the additions and reductions to nonperforming
assets in the consumer portfolio during 2004 and 2003.
Table 11 Nonperforming Consumer Assets Activity
(�ollars in millions)
Nonperforming loans and leases,
and foreclosed propertles
Balance, January 1
Additions to nonperforming assets�
FleetBoston balance, April 1, 2004
New nonaccrual loans and leases,
and foreclosed properties
Transfers from assets held-for-sale�l�
Total additions
Reductions in nonperforming assets:
Paydowns and payoffs
Sales
Retums to performing status�z�
Charge-offsc3�
Total reductions
Total net additions to (reductions in)
nonperforming assets
-------- Nonperforming oonsumer aseels,
Deoember 31
2004 2003
$ 719 $ 832
127 -
1,476 1,583
1 5
1,604 1,588
(376) (447)
(219) (265)
(793) (878)
(128) (111)
(1,516) (1,701)
88 (113)
$ 807 $ 719
�11 Includes assets heldfor-sale that were foreclosed and transferre0 to foreclosed properties.
l21 Consumer loans are generally returned to pertorming sta[us when pnncipal or interes[ is less
than 90 days past tlue.
�3� Consumer cretli[ card and consumer noo-real estate loans and leases are not classifietl as
nonperforming; therefore, the charge-oRS on these loans are not inclutletl above.
60 BANK OF AMERICA 2004
$ 55
13
10
49
-127
$ 127
0.20°�
0.20
On-balance sheet consumer loans and leases past due 90 days or
more and still accruing interest totaled $1.2 billion at December 31,
2004. This amount included $1.1 billion of credit card loans. When
the FleetBoston portfolio was acquired on April 1, 2004, it included
consumer loans and leases past due 90 days or more and still
accruing interest of $116 million including credit card loans of $98
million. At December 31, 2003, the comparable amount was $698
million, which included $616 million of credit card loans.
Nonperforming consumer asset sales in 2004 were $219 million,
comprised of $95 million of nonperforming consumer loans and
$124 million of consumer foreclosed properties. Nonperforming
consumer asset sales in 2003 totaled $265 million, comprised of
$141 million of nonperforming consumer loans and $124 million of
consumer foreclosed properties.
During the fourth quarter of 2004, we sold $1.1 billion of credit
card loans included in our held-for-sale portfolio that were acquired
as part of the FleetBoston acquisition.
Table 12 presents consumer net charge-offs and net charge-off
ratios for 2004 and 2003.
Table 12 Consumer Net Charge-0ffs and Net Charge-off Ratios�1�
2004 2003
�oouars �� mm�ons� Amount Percent Amount Percent
Residential mortgage $ 36 0.02% $ 40 0.03%
Credit card 2,305 5.31 1,514 5.37
Home equity lines 15 0.04 12 0.05
Direct/Indirect consumer 208 0.55 181 0.55
Otherconsumer 193 2.51 255 2.89
--------- ---------- — ----
Totalconsumer $2,757 0.93% $2,002 0.91%
i11 Peicentage amounts are calculated as net charge-offs divided by average outstantling loans and
leases dunng [he year for each loan category.
On-balance-sheet credit card net charge-offs increased $791 million
to $2.3 billion in 2004. The $6.8 billion of credit card loans acquired
from FleetBoston on April 1, 2004 accounted for $320 million in net
charge-offs. Other causes of the increase in credit card charge-offs
were organic growth, the continued seasoning of accounts, and the
return of $4.2 billion of previously securitized loan balances to the
balance sheet. Formerly securitized credit card loans are recorded on
the balance sheet after the revolving period of the securitization,
which has the effect of increasing loans on the balance sheet,
increasing Net Interest Income, Provision for Credit Losses and net
charge-offs, while reducing Noninterest Income.
Included in Other Assets were consumer loans held-for-sale of
$6.1 billion and $6.8 billion at December 31, 2004 and 2003,
respectively. Included in these balances were nonperforming con-
sumer loans held-for-sale of $28 million and $16 million at December
31, 2004 and 2003, respectively.
Commercial Portfolio Credit Risk Management
Credit risk management for the commercial portfolio begins with an
assessment of the credit risk profile of the borrower or counterparty
based on an analysis of the borrower's or counterparty's financial
position. As part of the overall credit risk assessment of a borrower
Table 13 Outstanding Commercial �oans and �eases
or counterparty, each commercial credit exposure or transaction is
assigned a risk rating and is subject to approval based on defined
credit approval standards. Subsequent to loan origination, risk rat-
ings are monitored on an ongoing basis. If necessary, they are
adjusted to reflect changes in the borrower's or counterparty's finan-
cial condition, cash flow or financial situation. We use risk rating
aggregations to measure and evaluate concentrations within portfo-
lios. Risk ratings are a factor in determining the level of assigned eco-
nomic capital and the allowance for credit losses. In making
decisions regarding credit, we consider risk rating, collateral, country,
industry and single name concentration limits while also balancing
the total borrower or counterparty relationship and SVA.
Our lines of business and Risk Management personnel use a
variety of tools to continuously monitor a borrower's or counterparty's
ability to perform under its obligations. Adjustments in credit expo-
sures are made as a result of this ongoing analysis and review.
Additionally, we utilize syndication of exposure to other entities, loan
sales and other risk mitigation techniques to manage the size and
risk profile of the loan portfolio.
Table 13 presents outstanding commercial loans and leases for
each year in the five-year period ending at December 31, 2004.
December 31
FleetBoston
2004 2003 2002 2001 2000 April 1, 2004
(oonars in minions) Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
Commercial-domestic $122,095 62.9%$ 91,491 69.7% $ 99,151 68.3% $110,981 67.7% $138,367 68.0% $ 31,796 51.6°�
Commercial real estate�l� 32,319 16.7 19,367 14.7 20,205 13.9 22,655 13.8 26,436 13.0 9,982 16.2
Commercial lease financing 21,115 10.9 9,692 7.4 10,386 7.2 11,404 7.0 11,888 5.8 10,720 17.4
Commercial-foreign 18,401 9.5 10,754 8.2 15,428 10.6 18,858 11.5 26,851 13.2 9,160 14.8
Total commercial loans
and leases $193,930 100.0% $131,304 100.0% $145,170 100.0% $163,898 100.0% $203,542 100.0% $ 61,658 100.0%
(1) Includes domestic commercial real estate loans of $31,879, $19,043, $19,910, $22,272 and $26,154 at December 31, 2004, 2003, 2002, 2001 and 2000, respectively; and foreign commercial real
estate loans of $440, $324, $295, $383 and $282 at December 31, 2004, 2003, 2002, 2001 and 2000, respectively.
BANK OF AMERICA 2004 61
i
�
�
•
�
s
Concentrations of Commercial Credit Risk
Portfolio credit risk is evaluated and managed with a goal that
concentrations of credit exposure do not result in undesirable levels
of risk. We review, measure, and manage concentrations of credit
exposure by industry, product, geography and customer relationship.
Distribution of Loans and Leases by loan size is an additional meas-
ure of the portfolio risk diversification. We also review, measure, and
manage commercial real estate loans by geographic location and prop-
erty type. In addition, within our international portfolio, we evaluate
borrowings by region and by country. Tables 14 through 19 summarize
these concentrations. These activities play an important role in man-
aging credit risk concentrations and for other risk mitigation purposes.
From the perspective of portfolio risk management, customer
concentration management is most relevant in Global Capital Markets
and Investment Banking. Within Global Capital Markets and
Investment Banking, concentrations continue to be addressed
through the underwriting and ongoing monitoring processes, the
established strategy of "originate to distribute" and partly through
the purchase of credit protection through credit derivatives. We utilize
various risk mitigation tools to economically hedge our risk to certain
credit counterparties. Credit derivatives are financial instruments
that we purchase for protection against the deterioration of credit
quality. At December 31, 2004, we had $13.1 billion of credit pro-
tection. The total cost of the premium of the credit derivatives port-
folio was $84 million and $68 million for 2004 and 2003,
respectively. Two widely used tools are credit default swaps and col-
lateralized loan obligations (CLOs) in which a layer of loss is sold to
third parties. Earnings volatility increases due to accounting asym-
metry as we mark to market the credit default swaps, as required by
SFAS 133, and CLOs through Trading Account Profits, while the loans
are recorded at historical cost less allowance for credit losses or, if
held-for-sale, the lower of cost or market. The cost of credit portfolio
hedges including the negative mark-to-market was $144 million and
$330 million for 2004 and 2003, respectively.
Table 14 shows commercial utilized credit exposure by industry
based on Standard & Poor's industry classifications and includes
commercial loans and leases, SBLCs and financial guarantees, deriv-
atives, assets held-for-sale and commercial letters of credit. As
shown in the following table, commercial utilized credit exposure is
diversified across a range of industries.
62 BANK OF AMERICA 2004
Z'able 14 Commercial Utilized Credit Exposure by Industry
(D011ars in mllllons)
Real estate�l�
Diversified financials
Banks
Retailing
Education and government
Individuals and trusts
Materials
Consumer durables and apparel
Leisure and sports,
hotels and restaurants
Transportation
Healthcare equipment
and services
Capital goods
Commercial services and supplies
Food,beverage and tobacco
Energy
Media
Insurance
Religious and social organizations
Utilities
Food and staples retailing
Technology hardware
and equipment
Software and services
Telecommunication services
Automobiles and components
Pharmaceuticals and biotechnology
Household and personal products
Other
Total - - ---- -
December 31 Fleet6oston
2004 2003 April 1, 2004
36,672 $ 22,228 $ 12,957
25,932 20,427 3,557
25,265 25,088 1,040
23,149 15,152 6,539
17,429 13,919 1,629
16,110 14,307 2,627
14,123 8,860 5,079
13,427 8,313 3,482
13,331
13,234
12,643
12,633
11,944
11,687
7,579
6,232
5,851
5,710
5,615
3,610
3,398
3,292
3,030
1,894
994
371
3,132
$ 298,287
10,099
9,355
7,064
8,244
7,206
9,134
4,348
4, 701
3,638
4,272
5,012
1,837
1,941
1,655
2,526
1,326
466
302
1,474
2,940
3,268
4,939
4,355
3,866
2,552
2,044
2,616
2,822
475
1,948
1,456
1,463
770
883
746
590
195
3,751
$ 212,894 $ 78,589
�,11 Industries are viewed from a vanety of perspectives to bes[ isolate the perceived risks. For
purposes of this table, the real estate industry is defined based upon the borrowers' or counter-
parties' primary business activity using operating cash flow antl primary source of repayment as
key factors.
Table 15 presents the non-real estate outstanding commercial loans
and leases by industry. As shown in the table, the non-real estate
commercial loan and lease portfolio is diversified across a range
of industries.
Table 15 Non-real Estate Outstanding Commercial
Loans and Leases by Industry
(D011ars in millions)
Retailing
Diversified financials
Individuals and trusts
Transportation
Education and government
Capital goods
Materials
Commercial services and supplies
Food, beverage and tobacco
Leisure and sports, hotels
and restaurants
Healthcare equipment and services
Real estate�l�
Energy
Consumer durables and apparel
Media
Religious and social organizations
Utilities
Food and staples retailing
Technology hardware and equipment
Software and services
Telecommunication services
Banks
Automobiles and components
Insurance
Other�2�
Total
December 31
2004 2003
$ 16,908 $ 11,474
12,454 6,469
12,357 10,510
11,135 7,715
10,134 7,874
9,673 5,729
9,547 5,704
9,362 5,701
9,344 6,942
8,987
7,972
6,140
4,627
4,564
4,468
3,951
3,274
2,701
2,482
2,430
2,382
2,044
1,643
1,478
$ 161,611
7,477
4,052
4,413
2,516
2,161
2,821
2,975
2,635
1,364
1,260
948
1,967
1,199
1,029
840
6,162
$ 111,937
FleetBoston
April 1, 2004
$ 4,287
2,135
2,681
2,806
1,155
4,073
4,191
2,876
2,326
2,488
3,460
3,608
1,740
2,269
2,566
431
1,431
1,349
1,142
713
812
454
570
492
1,621
$ 51,676
�l� Commercial protluct loans and leases to borrowers in the real estate intlustry for which the
ultimate source of repayment is not dependent on the sale, lease, rental or refinancing of
reai estate.
�2� Other includes loans antl leases to the pharmaceutical, biotechnology, household and personal
products industries. Reduction in the Other category was primarily attributable to a revision in
the methotlology for assigning intlustries to margin loan antl commercial credit card exposure.
These exposures were previously assigned to Other.
Table 16 presents outstanding commercial real estate loans by
geographic region and by property type. The amounts outstanding
exclude commercial loans and leases secured by owner-occupied real
estate. Therefore, the amounts exclude outstanding loans and leases
that were made on the general creditworthiness of the borrower for
which real estate was obtained as security and for which the ultimate
repayment of the credit is not dependent on the sale, lease, rental or
refinancing of the real estate. As shown in the table, the commercial
real estate loan portfolio is diversified in terms of geographic region
and property type.
Table 16 Outstanding Commercial Real Estate Loans�1�
December 31 FleetBoston
(D011ars in millions) 2004 2003 April 1, 2004
By Geographic Regioncz�
Northeast $ 6,700 $ 683 $ 3,732
California 6,293 4,705 567
Florida 3,562 2,663 215
Southeast 3,448 2,642 387
Southwest 3,265 2,725 389
Northwest 2,038 1,976 68
Midwest 1,860 1,431 347
Midsouth 1,379 1,139 152
Other states�3� 1,184 448 3,234
Geographically diversified 2,150 631 769
Non-U.S. 440 324 122
Total $ 32,319 $19,367 $ 9,982
By Property Type
Residential $ 5,992 $ 3,631 $ 314
Office buildings 5,434 3,431 2,649
Apartments 4,940 3,411 1,687
Shopping centers/retail 4,490 2,295 1,474
Land and land development 2,388 1,494 155
Industrial/warehouse 2,263 1,790 351
Hotels/motels 909 548 531
Multiple use 744 560 269
Resorts 252 261 -
Other 4,907 1,946 2,552
Total $ 32,319 $19,367 $ 9,982
(11 For purposes of this table, commercial real estate product reflects loans dependent on the sale,
lease or refinance of real estate as the fnal source of repayment.
(21 Distribution is basetl on geographic location of collateral. Geographic regions are in the U.S.
unless othenvise noted.
�31 The reduction in Other states subsequent to April 1, 2004 is the result of a more granular
distribution of the FleetBOSton portfolio to other geographic regions inclutling the Northeast.
BANK OF AMERICA 2004 63
C�
�
�
•
�
•
Foreign Portfolio
Table 17 sets forth total foreign exposure broken out by region at
December 31, 2004 and 2003. Total foreign exposure is defined to
include credit exposure, net of local liabilities, plus securities and
other investments for all exposure with a country of risk other than
the United States.
Table 17 Regional Foreign Exposure�l�
December 31 FleetBoston
(D011ars in millions) 2004 2003 April 1, 2004
Europe $62,428 $39,496 $ 5,003
LatinAmerica�23) 10,823 5,791 7,568
Asia Pacific�z 4� 10,736 9,547 443
Middle East 527 584 82
Africa 238 108 41
Other�5� 5,327 4,374 865
Total $90,079 $59,900 $14,002
(1) The balances above reflect the subtraction of local funtling or liabilities from local exposures
as allowed by the Federal Financial Institutions 6camination Council (FFIEC).
�z1 Exposures for Latin Amenca and Asia Pacific have been reduced by $196 and $14, respectively,
at December 31, 2004, antl $173 and $13, respectively, at December 31, 2003. Such amounts
represent the fair value of U.S. Veasury securities heltl as collate2l outside me counVy of exposure.
�3� Inclutles Bermutla and Cayman Islands.
(4) Includes Australia and New Zealand.
�5� Other includes Canatla and supranational enti[ies.
Our total foreign exposure was $90.1 billion at December 31, 2004,
an increase of $30.2 billion from December 31, 2003. Our foreign
exposure was concentrated in Europe, which accounted for $62.4 billion,
or 69 percent, of total foreign exposure. The increase in total foreign
exposure is due to growth in Europe and the addition of exposure
associated with FleetBoston. Growth of exposure in Europe during
2004 was mostly in Western Europe and was distributed across a
variety of industries with the largest concentration in the banking sec-
tor that accounted for approximately 53 percent of the growth. At
December 31, 2004 and 2003, the United Kingdom and Germany
were the only countries whose total cross-border outstandings
exceeded 0.75 percent of our total assets. Our second largest for-
eign exposure was in Latin America, which accounted for $10.8 bil-
lion, or 12 percent, of total foreign exposure. Growth of exposure in
Latin America during 2004 was due to the addition of operations
associated with FleetBoston. Latin America, including Brazil and
Argentina, may continue to experience economic, political and social
uncertainties, which may impact market, credit, and transfer risk of
this region. For more information on our Latin America exposure, see
the discussion of emerging markets below.
As shown in Table 18, at December 31, 2004 and 2003,
Germany had total cross-border exposure of $12.0 billion and $6.9
billion, respectively, representing 1.08 percent and 0.95 percent of
total assets, respectively. At December 31, 2004 and 2003, the
United Kingdom had total cross-border exposure of $11.9 billion and
$10.1 billion, respectively, representing 1.07 percent and 1.41 per-
cent of total assets, respectively. The largest concentration of the
exposure to both of these countries was with banks.
Table 18 Cross-border Exposure Exceeding One Percent of Total Assetsil.2�
(D011ars in millions)
Germany
United Kingdom
Public
December 31 Sector
2004 $ 659
2003 441
2002 334
2004 $ 74
2003 143
2002 167
Private
Banks Sector
- ----- - ---------
$ 6,251 $ 5,081
3,436 2,978
2,898 2,534
$ 3,239 $ 8,606
3,426 6,552
2,492 6,758
Cross- Exposure as
border a Percentage
Exposure of Total Assets
$11,991- -- ---1.08%
6,855 0.95
5,766 0.89
$11,919 1.07%
10,121 1.41
9,417 1.46
�1) Fxposure includes cross-0order claims by our foreign offces as follows: loans, accrued interest receivable, acceptances, time deposits placed, trading account assets, secunties, derivative assets,
other interestearning investments and other monetary assets. Amounts also include unused commitments, SBLCs, commercial le[ters of credit and formal guarantees. Sector definitions are based on the
FFlEC instructions for preparing the Country Enposure Report.
�z1 The total cross-border exposure for Germany antl United Kingdom at December 31, 2004 includes tlenvatives exposure of $3,641 and $2,564, respectively, against which we holtl collateral totaling $1,477
antl $1,788, respectively.
As shown in Table 19, at December 31, 2004, foreign exposure to
borrowers or counterparties in emerging markets increased 42 per-
cent to $15.5 billion, or 17 percent, of total foreign exposure, from
$10.9 billion, or 18 percent of total exposure at the end of 2003. At
December 31, 2004, 58 percent, of the emerging markets exposure
was in Latin America compared to 42 percent at December 31, 2003.
The increase in Latin America was attributable to the addition of the
$6.7 billion FleetBoston portfolio on April 1, 2004. This growth was
64 BANK OF AMERICA 2004
partially offset by continued reductions in Loans and Leases, and
trading activity exposure in Argentina, Brazil and Chile. Our 24.9 percent
investment in Grupo Financiero Santander Se�n (GFSS) accounted
for $1.9 billion of reported exposure in Mexico.
The company's largest exposure in Latin America was in Brazil.
Our exposure in Brazil at December 31, 2004 and 2003, included $1.4
billion and $331 million, respectively, of traditional cross-border credit
exposure (Loans and Leases, letters of credit, etc.), and $1.8 billion and
$193 million, respectively, of local country exposure net of local liabilities.
Nonperforming assets in Brazil were $38 million at December 31,
2004, compared to $39 million at December 31, 2003. For 2004 and
2003, net charge-offs totaled $59 million and $33 million, respectively.
We have risk mitigation instruments associated with certain
exposures for Brazil, including structured trade transactions intended
to mitigate transfer risk of $950 million and third party funding of
$286 million, resulting in our total foreign exposure net of risk mitigation
for Brazil of $2.2 billion.
Our exposure in Argentina at December 31, 2004 and 2003,
included $286 million and $135 million, respectively, of traditional cross-
border credit exposure (Loans and Leases, letters of credit, etc.), and
$16 million and $24 million, respectively, of local country exposure net of
loca� liabilities. Also included in Argentina's December 31, 2004 balance
were $89 million of securities. At December 31, 2004, Argentina
'1'able 19 Selected Emerging Markets�1�
nonperforming assets, including securities, were $350 million compared to
$107 million at December 31, 2003. For 2004, net recoveries for Argentina
totaled $3 million compared to net chargeoffs of $82 million in 2003.
At December 31, 2004, 41 percent of the emerging markets
exposure was in Asia Pacific compared to 55 percent at December
31, 2003. Asia Pacific emerging markets exposure was largely
unchanged. Increases in Taiwan and Hong Kong were offset by
decreases in South Korea, Singapore and Other Asia Pacific. The
increase in Taiwan was attributable to higher short-term placements
with other financial institutions, and commercial loans and leases.
The increase in Hong Kong was due to higher swaps and derivatives
exposure to other financial institutions. Higher commercial loans and
leases also contributed to the increase in Hong Kong.
Table 19 sets forth regional foreign exposure to selected countries
defined as emerging markets.
Local 7otal Increase/
Loans Total Country Foreign (Decrease) Fleet-
and Leases, Securities/ Cross- Exposure Exposure from Boston
and Loan Other Derivative Other border Net of Local December 31, December 31, April 1,
(Dollars in millions) Commitments Financingl2) Assets InvestmeMS�3,41 Exposure�5� Liabilities�61 2004 2003 2004
Region/Country
Latin America
Brazil $ 1,179 $ 268 $ 19 $ 122 $ 1,588 $ 1,837 $ 3,425 $ 2,754
Mexico��� 578 148 136 2,004 2,866 - 2,866 83
Chile 215 122 1 3 341 839 1,180 1,049
Argentina 181 105 - 89 375 16 391 80
Other Latin America�8� 311 180 144 248 883 192 1,075 358
Total Latin America 2,464 823 300 2,466 6,053 2,884 8,937 4,324
Asia Pacific
India 311 268 140 225 944 548 1,492 (73)
South Korea 290 477 89 213 1,069 314 1,383 (235)
Taiwan 214 114 82 42 452 875 1,327 786
Hong Kong 225 57 307 129 718 401 1,119 249
Singapore 200 23 70 47 340 - 340 (227)
Other Asia Pacific�e� S1 80 58 278 497 157 654 (222)
Total Asia Pacific 1,321 1,019 746 934 4,020 2,295 6,315 278
Central and
Eastern Europe�8� 7 30 31 173 241 - 241 (29)
Total $ 3,792 $ 1,872 $ 1,077 $ 3,573 $10,314 $ 5,179 $15,493 $ 4,573
$ 3,838
570
1,186
542
579
6, 715
9
158
26
6
21
50
270
$ 6,985
�11 There is no generally acceptetl definition of emerging markets. The definition that we use includes all coun[ries in Latin America exclutling Cayman Islands and Bermutla; all countries in Asia Pacific
exclutling Japan, Australia and New Zealand; and all countnes in Central and Eastem Europe excluding Greece.
�z1 Inclutles accept2nces, SBLCs, commercial letters of credit and formal guarantees.
�3) Amounts outstanding for Other Latin America and Other Asia Pacific have been reduced by $196 and $14, respectivety, at December 31, 2004 and $173 and $13, respectively, at December 31, 2003.
Such amounts represent the fair value of U.S. Treasury securities heltl as collateral outsitle the country of exposure.
141 Cross-border resale agreements are presented based on the domicile of the counterparty because the counterparty has the legal obligation for repayment. For regulatory reporting untler FFIEC guidelines,
cross-border resale agreements are presented based on the domicile of the issuer of the securities that are heltl as collateral.
Is1 Cross-border exposure includes amounts payable to us by borrowers or counterparties with a country of residence other than the one in which the cretlit is booked, regartlless of the currency in which the
claim is denominated, consistent with FFlEC reporting rules.
l6) Local country exposure inclutles amounts payable to us by borrowers with a country of residence in which the credit is booked, regardless of the currency in which the claim is denominated. Management
subtracts local funding or liabilities from local exposures as allowed by the FFIEC. Total amount of local country exposure funded by local liabilities at December 31, 2004 was $17,189 comparetl to
$5.336 a[ December 31, 2003. Local country exposure funded by local liabilities at December 31, 2004 in Latin America and Asia Pacific was $9,098 and $8,091, respectively, of which $4,240 was in
Brazil, $3,432 in Hong Kong, $2,596 in Singapore, $1,662 in Argentina, $1,210 in Chile and $1,092 in Mexico. There were no other countries with local country exposure funtled by local liabilities greater
Ihan $500.
��� Includes $1,859 related to GFSS acpuired in the first quarter of 2003.
(81 p�her Latin America, Other Asia Pacific, and Central and Eastern Europe include countries each with total foreign exposure of less than $300.
BANK OF AMERICA 2004 65
•
�
•
•
�
•
Commercial Portfolio Credit Quality Performance
Overall commercial credit quality continued to improve in 2004 due
to an improving economy and high levels of liquidity in the capital
markets. All major commercial asset quality performance indicators
showed positive trends. Net charge-offs, nonperforming assets and
criticized exposure continued to decline. As presented in Table 20,
commercial criticized credit exposure decreased $2.4 billion, or 19
percent, to $10.2 billion at December 31, 2004. The net decrease was
driven by $16.8 billion of paydowns, payoffs, credit quality improve-
ments, loan sales and net charge-offs; partially offset by the addition
of $7.1 billion of FleetBoston commercial criticized exposure on April
Table 20 Commercial Criticized Exposure�l�
(Dollars in millions)
Commercial — domestic
Commercial real estate
Commercial lease financing
Commercial — foreign
Total commercial criticized exposure
1, 2004 and $7.3 billion of newly criticized exposure. The decrease
in 2004 was centered in Global Capital Markets and Investment
Banking, Global Business and Financial Services and Latin America.
These businesses combined to reduce commercial criticized exposure
by $2.2 billion during 2004, despite the addition of the FleetBoston
commercial criticized exposure balance of $6.8 billion on April 1,
2004, related to these businesses. Reductions were concentrated in the
utilities, aerospace and defense, and telecommunications industries.
Table 20 presents commercial criticized exposure at December
31, 2004 and 2003.
December 31
2004
Amount Percent«> Amount
$ 6,340 3.38% $ 8,044
1,028 2.54 983
1,347 6.38 1,011
1,534 3.12 2,612
$10,249 3.44°,6 $12,650
FleetBoston
2003 April 1, 2004
Percent�21 Amount PerceM(2)
-------_5.73% $ 4,830---------9.86°k
3.89 406 4.08
10.43 768 5.42
6.97 1,057 10.01
5.94% $ 7,061 8.44%
(11 Criticized exposure corresponds to the Special Mention, SuDStandard and Doubttul asset categones tlefinetl by regulatory authonties. Exposure amouMS include loans antl leases, SBLCS and financial
guarantees, tlerivative assets, assets helt�for-sale and commercial letters of credit.
(2� Commercial criticized exposure is taken as a percentage of total commercial utilizetl exposure which includes loans antl leases, SBLCs and fnancial guarantees, derivative assets, assets heltl-for-sale
and commercial letters of cretlit.
66 BANK OF AMERICA 2004
We routinely review the loan and lease portfolio to determine if any
credit exposure should be placed on nonperforming status. An asset
is placed on nonperforming status when it is determined that full col-
lection of principal and/or interest in accordance with its contractual
terms is not probable. As presented in Table 21, nonperForming com-
mercial assets decreased $654 million to $1.6 billion at December
31, 2004 due primarily to the $760 million decrease in the nonper-
forming commercial loans and leases despite the addition of the
$944 million FleetBoston nonperForming commercial loans and
leases at April 1, 2004. The decrease in 2004 was centered in Latin
America, Global Capital Markets and Investment Banking and Global
Business and Financial Services. These businesses combined to
reduce nonperforming commercial loans and ieases by $566 million
during 2004, despite the addition of the FleetBoston commercial non-
performing loan and lease balance of $874 million on April 1, 2004,
related to these businesses. The decreases in total nonperForming
commercial loans and leases resulted from paydowns and payoffs of
$1.4 billion, charge-offs of $640 million, loan sales of $515 million
and returns to performing status of $348 million, partially offset by
new nonaccrual loan infiows of $1.3 billion and the addition of
nonperforming loans and leases from the FleetBoston portfolio.
Increased levels of paydowns and payoffs compared to 2003 resulted
from the improvement in credit quality experienced in 2004.
Nonperforming commercial — domestic loans decreased by
$533 million and represented 0.70 percent of commercial — domestic
loans at December 31, 2004 compared to 1.52 percent at December
31, 2003. Nonperforming commercial — foreign loans decreased $311
million and represented 1.45 percent of commercial — foreign loans at
December 31, 2004 compared to 5.37 percent at December 31, 2003.
The improvement in the percentage of nonperForming commercial —
domestic loans to the total commercial — domestic loans was driven
by the growth in commercial — domestic loans and the addition of the
FleetBoston portfolio.
Nonperforming commercial asset sales in 2004 were $601 million,
comprised of $515 million of nonperforming commercial loans, $74
million of commercial foreclosed properties and $12 million of
nonperforming securities. Nonperforming commercial asset sales in
2003 totaled $1.6 billion, comprised of $1.5 billion of nonperforming
commercial loans and $123 million of commercial foreclosed properties.
Table 21 presents nonperforming commercial assets for each year in the five-year period ending at December 31, 2004.
Table 21 Nonperforming Commercial Assets�1�
(D011ars in mlllions)
Nonperforming commercial loans and leases
Commercial — domestic
Commercial real estate
Commercial lease financing
Commercial — foreign
Total nonperforming commercial loans and leases
Nonperforming securitiest2�
Commercial foreclosed properties
2004
$ 855
87
266
267
1,475
140
33
_December 31 _ _
2003 2002 2001
$ 1,388 $ 2,621 $ 2,991
142 164 243
127 160 134
57S 1,359 459
2,235 4,304 3,827
67 126 68
�
FleetBoston �
2000 April 1, 2004
$ 2,715 $ 317
239 80
65 51
482 496
3,501 944
— 135
67 13
Total nonperforming commercial assets�3� $ 1,648 $ 2,302 $ 4,430 $ 3,895 $ 3,568 $ 1,092
Nonperforming commercial loans and leases as a percentage of
outstanding commercial loans and leases 0.76% 1.70% 2.96% 2.33% 1.72°� 1.53%
Nonperforming commercial assets as a percentage of
outstanding commercial loans, leases and foreclosed properties 0.85 1.75 3.05 2.38 1.75 1.77
�11 In 2004, $111 in Interest Income was estimatetl to be contractually tlue on nonperforming commercial loans and leases, antl troubletl debt restructured loans.
(2) Primarily related to international securities heltl in the AfS securities portfolio.
(3) Balances tlo not include $123, $186, $73, $289 and $84 of nonpertorming commercial assets, primanly commercial loans held-for-sale included in Other Assets at December 31, 2004, 2003, 2002,
2001 and 2000, respectively.
_ I
BANK OF AMERICA 2004 67
•
u
•
Table 22 presents the additions and reductions to nonperforming Table 23 presents commercial net charge-offs and net charge-off
assets in the commercial portfolio during 2004 and 2003. ratios for 2004 and 2003.
Table 22 Nonperforming Commercial Assets Activity
(D011ais in millions) 2004 2003
Nonperforming loans and leases,
and foreclosed properties
Balance, January 1 $ 2,302 $ 4,430
Additions to nonperforming assets:
FleetBoston balance, April 1, 2004 957 -
New nonaccrual 1,294 2,134
Advances 82 199
Total additions 2,333 2,333
Reductions in nonperforming assets:
Paydowns and payoffs (1,405) (1,221)
Sales (589) (1,583)
Returns to performing status�l� (348) (197)
Charge-offs�2� (640) (1,352)
Transfers to assets held-for-sale (145) (108)
Total reductions (3,127) (4,461)
Total net reductions in
nonperforming assets (794) (2,128)
Nonperforming securlties�3�
Balance, January 1 - -
Additions to nonperforming assets:
FleetBoston balance, April 1, 2004 135 -
New nonaccrual 56 -
Reductions in nonperforming assets:
Paydowns and payoffs (39) -
Sales (12) -
Total net securities additions to
nonperforming assets 140 -
Nonpertorming commerclal
assets, December 31 $ 1,648 $ 2,302
(11 Commercial loans antl leases may be restored to peROrming status when all principal and
interest is current and full repayment of the remaining contractual principal and interest is
exDected, or when the loan othenvise becomes well secured and is in the process of collection.
�2� Certain loan and lease Droducts, including commercial cretlit card, are not classifetl as
nonperforming; therefore, the chargeoffs on these loans are not included above.
(3) Primanly related [o international securities heltl in t�e AFS secunties portfolio.
Domestic commercial loans past due 90 days or more and still accruing
interest were $121 million at December 31, 2004 compared to $108
million at December 31, 2003. The increase was driven by the addition
of the FleetBoston past due portFolio of $28 million on April 1, 2004.
68 BANK OF AMERICA 2004
Table 23 Commercial Net Charge-offs and Net Charge-0ff Ratios�1�
2004 2003
�oonars �n miiiions� Amount Percent Amount Percent
Commercial - domestic $ 177 0.15% $ 633 0.68%
Commercial real estate (3) (0.01) 41 0.20
Commercial lease financing 9 0.05 124 1.23
Commercial - foreign 173 1.05 306 2.36
Total commercial $ 356 0.20% $1,104 0.81%
�1� Percentage amounts are calculated as net charge-0ffs divided by average outstanding loans and
leases tluring the year for each loan category.
Commercial — domestic loan net charge-offs, as presented in Table 23,
decreased $456 million to $177 million in 2004, reflecting overall
improvement in the portfolio.
Commercial — foreign loan net charge-offs were $173 million in
2004 compared to $306 million in 2003. The decrease reflected
lower net charge-offs in Argentina, the United Kingdom and Italy. The
industry with the largest decrease in net charge-offs was utilities. The
country with the largest net charge-offs in 2004 was Italy.
At December 31, 2004 and 2003, our credit exposure related
to Parmalat Finanziaria S.p.A. and its related entities (Parmalat) was
less than $1 million and $274 million, respectively; the latter number
included $30 million of derivatives. Nonperforming loans related to
Parmalat were less than $1 million and $226 million at December
31, 2004 and 2003, respectively.
Included in Other Assets were commercial loans held-for-sale
and leveraged tease partnership interests of $1.3 billion and $198
million, respectively, at December 31, 2004 and $1.6 billion and
$332 million, respectively, at December 31, 2003. Included in these
balances were nonperforming loans held-for-sale and leveraged lease
partnership interests of $100 million and $23 million, respectively, at
December 31, 2004 and $183 million and $3 million, respectively, at
December 31, 2003.
Provision for Credit Losses
The Provision for Credit Losses was $2.8 billion in 2004, a two percent
decline, despite the addition of the FleetBoston portfolio. The consumer
portion of the Provision for Credit Losses increased to $3.6 billion in
2004 driven by consumer net charge-offs of $2.8 billion. Organic
growth, overall seasoning of credit card accounts, the return of secu-
ritized loans to the balance sheet, and increases in minimum pay-
ment requirements drove higher consumer net charge-offs and
consumer provision. The commercial portion of the Provision for
Credit Losses was a negative $623 million in 2004 with commercial
net charge-offs of $356 million. The commercial provision decreased
due to continued commercial credit quality improvement. The
Provision for Credit Losses included a negative $70 million related to
changes in the general portion of the Allowance for Loan and Lease
Losses due to improved economic conditions. The Provision for Credit
Losses also included a negative $99 million related to changes in the
reserve for unfunded lending commitments due to continued com-
mercial credit quality improvement and improved economic conditions.
We expect that continued seasoning of credit card accounts, the
return of approximately $4.5 billion of securitized loans to the balance
sheet in 2005 and increased minimum payment requirements will
result in higher levels of consumer net charge-offs in 2005.
Commercial net charge-offs may return to more normalized levels dur-
ing 2005. These anticipated increases in net charge-offs, coupled with
less dramatic improvement in commercial credit quality than experi-
enced in 2004, are expected to result in increases in the consumer
and commercial portions of the Provision for Credit Losses in 2005.
Allowance for Credit Losses
Allowance for Loan and Lease Losses
The Allowance for Loan and Lease Losses is allocated based on three
components. We evaluate the adequacy of the Allowance for Loan and
Lease Losses based on the combined total of these three components.
The first component of the Allowance for Loan and Lease
Losses covers those commercial loans that are either nonperforming
or impaired. An allowance is allocated when the discounted cash
flows (or collateral value or observable market price) are lower than
the carrying value of that loan. For purposes of computing the spe-
cific loss component of the allowance, larger impaired loans are eval-
uated individually and smaller impaired loans are evaluated as a pool
using historical loss experience for the respective product type and
risk rating of the loans.
The second component of the Allowance for Loan and Lease
Losses covers performing commercial loans and leases, and consumer
loans. The allowance for commercial loans and leases is established
by product type after analyzing historical loss experience, by internal
risk rating, current economic conditions and performance trends
within each portfolio segment. The commercial historical loss experi-
ence is updated quarterly to incorporate the most recent data reflec-
tive of the current economic environment. As of December 31, 2004,
this resulted in an immaterial decrease to the commercial allowance
for loan losses from updating the historical loss experience. The
allowance for consumer loans is based on aggregated portfolio seg-
ment evaluations, generally by product type. Loss forecast models are
utilized for consumer products that consider a variety of factors includ-
ing, but not limited to, historical loss experience, estimated defaults or
foreclosures based on portfolio trends, delinquencies, economic trends
and credit scores. These consumer loss forecast models are updated
on a quarterly basis in order to incorporate information reflective of the
current economic environment. As of December 31, 2004, this resulted
in an immaterial increase to the allowance for consumer loan and lease
losses from updating the loss forecast models.
The third, or general component of the Allowance for Loan and
Lease Losses is maintained to cover uncertainties that affect our
estimate of probable losses. These uncertainties include the impre-
cision inherent in the forecasting methodologies, as well as domes-
tic and global economic uncertainty and large single name defaults
or event risk. We assess these components, and consider other cur-
rent events, like the Merger, and other conditions, to determine the
overall level of the third component. The relationship of the third com-
ponent to the total Allowance for Loan and Lease Losses may fluctu-
ate from period to period.
We monitor differences between estimated and actual incurred
loan and lease losses. This monitoring process includes periodic
assessments by senior management of loan and lease portfolios and
the models used to estimate incurred losses in those portfolios.
Additions to the Allowance for Loan and Lease Losses are made
by charges to the Provision for Credit Losses. Credit exposures
deemed to be uncollectible are charged against the Allowance for
Loan and Lease Losses. Recoveries of previously charged off
amounts are credited to the Allowance for Loan and Lease Losses.
The Allowance for Loan and Lease Losses for the consumer
portfolio as presented in Table 25 increased $1.3 billion to $3.8 billion
from December 31, 2003 due to the addition of $592 million on April
1, 2004 of FleetBoston allowance for consumer loan and lease
losses, and continued organic growth in consumer loans, primarily
credit card. The Allowance for Loan and Lease Losses on the credit
card portfolio increased $1.2 billion to $2.8 billion driven by the
$466 million addition related to the FleetBoston on-balance sheet
card portfolio on April 1, 2004, organic credit card portfolio growth,
the return of previously securitized credit card balances to the balance
sheet and increases in the minimum payment requirements.
BANK OF AMERICA 2004 69
�
�
•
•
•
�
The allowance for commercial loan and lease losses as presented
in Table 25 was $3.2 billion at December 31, 2004, a$726 million
increase from December 31, 2003. This increase was due to the
addition on April 1, 2004 of $1.7 billion of FleetBoston allowance for
commercial loans and leases to the portfolio partially offset by reduc-
tions resulting from improvement in the commercial loan portfolio.
Commercial credit quality continues to improve as reflected in the
continued declines in both commercial criticized exposure and com-
mercial nonperforming loans and leases. Specific reserves on com-
mercial impaired loans decreased $189 million, or 48 percent, in
2004, reflectingthe decrease in our investment in specific loans con-
sidered impaired of $910 million to $1.2 billion at December 31,
2004. The net decrease of $910 million inctuded the addition of
FleetBoston impaired loans on April 1, 2004 of $914 million offset
by net decreases of $1.8 billion in 2004. The decreased levels of crit-
icized, nonperforming and impaired loans, and the respective
reserves were driven by overall improvement in commercial credit
quality, including paydowns and payoffs, loan sales, net charge-offs
and returns to performing status.
The general portion of the Allowance for Loan and Lease Losses
increased $438 million during 2004. The addition of FleetBoston
general reserves on April 1, 2004 accounted for $508 million of the
increase. Although uncertainty regarding the depth and pace of the
economic recovery existed early in the year, the fourth quarter demon-
strated a strengthening of the economy, which led to a reduction in gen-
eral reserves of $70 million in 2004.
70 BANK OF AMERICA 2004
Reserve for Unfunded Lending Commitments
In addition to the Allowance for Loan and Lease Losses, we also estimate
probable losses related to unfunded lending commitments, such as
letters of credit and financial guarantees, and binding unfunded loan
commitments. Unfunded lending commitments are subject to individ-
ual reviews, and are analyzed and segregated by risk according to the
Corporation's internal risk rating scale. These risk classifications, in
conjunction with an analysis of historical loss experience, current
economic conditions and performance trends within specific portfolio
segments, and any other pertinent information result in the estima-
tion of the reserve for unfunded lending commitments. The reserve
for unfunded lending commitments is included in Accrued Expenses
and Other Liabilities on the Consolidated Balance Sheet.
We monitor differences between estimated and actual incurred
credit losses. This monitoring process includes periodic assess-
ments by senior management of credit portfolios and the models
used to estimate incurred losses in those portfolios.
Additions to the reserve for unfunded lending commitments are
made by charges to the Provision for Credit Losses. Credit exposures
(excluding derivatives) deemed to be uncollectible are charged
against the reserve.
The reserve for unfunded lending commitments decreased $14
million from December 31, 2003, primarily due to improved economic
conditions and improvement in the level of criticized letters of credit,
partially offset by the addition of $85 million of reserves on April 1,
2004 associated with FleetBoston unfunded lending commitments.
Table 24 presents a rollforward of the allowance for credit losses for five years ending December 31, 2004.
Table 24 Allowance for Credit Losses
(Dollars in millions)
Allowance for loan and lease losses, January 1
FleetBoston balance, April 1, 2004
Loans and leases charged off
Residential mortgage
Credit card
Home equity lines
Direct/Indirect consumer
Other consumert1�
Total consumer
Commercial - domestic
Commercial real estate
Commercial lease financing
Commercial - foreign
Total commercial
Total loans and leases charged off
Recoveries of loans and leases previously charged off
Residential mortgage
Credit card
Home equity lines
Direct/Indirect consumer
Other consumer
Total consumer
Commercial - domestic
Commercial real estate
Commercial lease financing
Commercial - foreign
Total commercial
Total recoveries of loans and leases previously charged off
Net charge-offs
Provision for loan and lease losses�2�
Transfers�3�
Allowance for loan and lease losses, December 31
Reserve for unfunded lending commitments, January 1
FleetBoston balance, April 1, 2004
Provision for unfunded lending commitments
Reserve for unfunded lending commitments, December 31
Total
Loans and leases outstanding at December 31
Allowance for loan and lease losses as a percentage of loans
and leases outstanding at December 31
Consumer allowance for loan and lease losses as a percentage
of consumer loans and leases outstanding at December 31
Commercial allowance for loan and lease losses as a percentage
of commercial loans and leases outstanding at December 31
Average loans and leases outstanding during the year
Net charge-offs as a percentage of average loans and leases
outstanding during the year
Allowance for loan and lease losses as a percentage of nonperforming
loans and leases at December 31
Ratio of the allowance for loan and lease losses at December 31
to net charge-offs
�11 Includes $635 related to the exit of the subprime real estate lending business in 2001.
(zl Includes $395 related to the exit of the subpnme real estate lending business in 2001.
�31 Includes primanly transfers to Iwns held-for-sale.
2ooa
$ 6,163
----2,763
(62)
(2,536)
(38)
(344)
(295)
(3,275)
(504)
(12)
(39)
(262)
(4,092)
26
231
23
136
102
518
327
15
30
89
461
---- 979
(3,113)
2,868
(55)
8,626
416
85
(99)
--- _ -402 __
$ -- 9,028 -
$ 521,837
1.65°,G
2003
$ 6,358
(64)
(1,657)
(38)
(322)
(343)
(2,424)
(857)
(46)
(132)
(408)
(1,443)
(3,867)
24
143
26
141
88
-- 422
224
5
8
102
339
761
(3,106)
2,916
(5)
6,163
493
(��)
416
$ 6,579
$ 371,463
1.66%
1.17 1.06
1.64 1.87
$472,645 $356,148
0.66% 0.87%
390 215
2.77 1.98
2002
$ 6,278
(56)
(1,210)
(40)
(355)
(395)
(2,056)
(1,625)
(45)
(168)
2001
$ 6,365
(39)
(753)
(32)
(389)
(1,216)
(2,429)
(2,021)
(46)
(99)
(2,404) (2,415)
(4,460) (4,844)
14
116
14
145
99
388
314
7
9
45
375
763
(3,697)
3,801
6,358
-- 597
(104)
-- -- 493 -
$ 6,851
$ 342, 755
1.85%
0.95
2.43
$ 336,819
1.10%
126
1.72
13
81
13
139
135
381
167
7
4
41
219
600
(4,244)
4,163
6,278
473
124
597
$ 6,875
$329,153
1.91 %
1.12
2.16
$365,447
1.16%
139
1.48
2���
$ 6,314
(36)
(392)
(29)
(395)
(582)
(1,434)
(1,396)
(31)
(17)
(117)
(1,561)
(2,995)
9
54
9
149
197
418
122
20
4
31
177
595
(2,400)
2,576
(125)
6,365
514
(41)
473
$ 6,838
$392,193
1.62 %
0.97
1.81
$392,622
\ J
•
0.61%
122
2.65
•
BANK OF AMERICA 2004 71
•
For reporting purposes, we allocate the allowance for credit losses across products. However, the allowance is available to absorb any credit
losses without restriction. Table 25 presents our allocation by product type.
Table 25 Allocation of the Allowance for Credit Losses by Product Type
(D011ars in millions)
Allowance for loan and
lease losses
Residential mortgage
Credit card
Home equity lines
Direct/Indirect consumer
Other consumer
Total consumer
Commercial - domestic
Commercial real estate
Commercial lease financing
Commercial - foreign
� Total commercial�1� �
General
2004 2003
Amount Percent Amount Percent
$ 199
2,757
92
405
382
3,835
1,382
505
365
926
3,178
1,613
2.3°h
32.0
1.1
4.7
4.4
44.5
16.0
5.9
4.2
10.7
36.8
18.7
$ 149
1,602
61
340
384
2,536
1,257
413
207
575
2,452
1,175
2.4%
26.0
1.0
5.5
6.2
41.1
20.4
6.7
3.4
9.3
39.8
19.1
December 31 FleetBoston
2002 2001 2000 April 1, 2004
Amount Percent Amount Percent Amount Percent Amount Percent
$ 108
1,031
49
361
332
1,881
2,231
439
n/a
855
3,525
952
1.7%
16.2
0.8
5.7
5.2
29.6-
35.1
6.9
n/a
13.4
55.4
15.0
$ 145
821
83
367
443
1,859
1,901
905
n/a
730
3,536
883
2.3%
13.1
1.3
5.8
7.1
29.6
30.3
14.4
n/a
11.6
56.3
14.1
$ 151
549
77
320
733
1,830
1,926
980
n/a
778
3,684
851
2.4%
8.6
1.2
5.0
11.5
28.7
30.3
15.4
n/a
12.2
57.9
13.4
$ 40
466
17
43
26
----592
704
264
84
611
1,663
508
1.4%
16.9
0.6
1.6
0.9
21.4
25.5
9.6
3.0
22.1
60.2
18.4
Allowance for loan and
lease losses 8,626 100.0% 6,163 100.0% 6,358 100.0% 6,278 100.0% 6,365 100.0% 2,763 100.0°�
----
Reserve for unfunded lending
� commitments 402 416 493 597 473 85
Total $9,028 $6,579 $6,851 $6,875 $6,838 $2,848
�1� Inclutles allowance for loan and lease losses of commercial impaired loans of $202, $391, $919, $763 antl $640 at December 31, 2004, 2003, 2002, 2001 and 2000, respectivery.
n/a = Not available; included in commercial - domestic at December 31, 2002, 2001 antl 2000.
•
Problem Loan Management
Banc of America Strategic Solutions, Inc. (SSI) is a majority-owned
consolidated subsidiary of Bank of America, N.A., a wholly owned
subsidiary of the Corporation, which manages problem asset resolu-
tion and the coordination of exit strategies. This may include bulk
sales, collateralized debt obligations and other resolutions of domes-
tic commercial distressed assets and, beginning in 2004, certain
consumer distressed loans.
During 2004 and 2003, Bank of America, N.A. sold commercial
loans with a gross book balance of approximately $1.0 billion and
$3.0 billion, respectively, to SSI. In addition, in December of 2004,
Bank of America, N.A. and NationsCredit Financial Services
Corporation sold manufactured housing loans with a gross book bal-
ance of $2.9 billion, to SSI. For tax purposes, under the Code, the
sales were treated as a taxable exchange. The sales had no financial
statement impact on us because the sales were transfers among
entities under common control, and there was no change in the
individual loan resolution strategies.
72 BANK OF AMERICA 2004
Market Risk 1VIanagement
Market risk is the risk that values of assets and liabilities or revenues
will be adversely affected by changes in market conditions such as
market movements. This risk is inherent in the financial instruments
associated with our operations and/or activities including loans,
deposits, securities, short-term borrowings, long-term debt, trading
account assets and liabilities, and derivatives. Market-sensitive
assets and liabilities are generated through loans and deposits
associated with our traditional banking business, our customer and
proprietary trading operations, our ALM process, credit risk mitigation
activities, and mortgage banking activities.
Our traditional banking loan and deposit products are nontrading
positions and are reported at amortized cost for assets or the amount
owed for liabilities (historical cost). While the accounting rules require
a historical cost view of traditional banking assets and liabilities,
these positions are still subject to changes in economic value based
on varying market conditions. Interest rate risk is the effect of
changes in the economic value of our loans and deposits, as well as
our other interest rate sensitive instruments, and is reflected in the
levels of future income and expense produced by these positions ver-
sus levels that would be generated by current levels of interest rates.
We seek to mitigate interest rate risk as part of the ALM process.
We seek to mitigate trading risk within our prescribed risk
appetite using hedging techniques. Trading positions are reported at
estimated market value with changes reflected in income. Trading
positions are subject to various risk factors, which include exposures
to interest rates and foreign exchange rates, as well as mortgage,
equity market, commodity and issuer credit risk factors. We seek to
mitigate these risk exposures by utilizing a variety of financial instru-
ments. The following discusses the key risk components along with
respective risk mitigation techniques.
Interest Rate Risk
Interest rate risk represents exposures we have to instruments
whose values vary with the level of interest rates. These instruments
include, but are not limited to, loans, debt securities, certain trading-
related assets and liabilities, deposits, borrowings and derivative
instruments. We seek to mitigate risks associated with the expo-
sures in a variety of ways that typically involve taking offsetting posi-
tions in cash or derivative markets. The cash and derivative
instruments allow us to seek to mitigate risks by reducing the effect
of movements in the level of interest rates, changes in the shape of
the yield curve as well as changes in interest rate volatility. Hedging
instruments used to mitigate these risks include related derivatives
such as options, futures, forwards and swaps.
Foreign Exchange Risk
Foreign exchange risk represents exposures we have to changes in
the values of current holdings and future cash flows denominated in
other currencies. The types of instruments exposed to this risk
include investments in foreign subsidiaries, foreign currency-denomi-
nated loans, foreign currency-denominated securities, future cash
flows in foreign currencies arising from foreign exchange transac-
tions, and various foreign exchange derivative instruments whose val-
ues fluctuate with changes in currency exchange rates or foreign
interest rates. Instruments used to mitigate this risk are foreign
exchange options, currency swaps, futures, forwards and deposits.
These instruments help insulate us against losses that may arise
due to volatile movements in foreign exchange rates or interest rates.
Mortgage Risk
Our exposure to mortgage risk takes several forms. First, we trade
and engage in market-making activities in a variety of mortgage
securities, including whole loans, pass-through certificates, commer-
cial mortgages, and collateralized mortgage obligations. Second, we
originate a variety of asset-backed securities, which involves the
accumulation of mortgage-related loans in anticipation of eventual
securitization. Third, we may hold positions in mortgage securities
and residential mortgage loans as part of the ALM portfolio. Fourth,
we create MSRs as part of our mortgage activities. See Notes 1 and
8 of the Consolidated Financial Statements for additional information
on MSRs. These activities generate market risk since these instru-
ments are sensitive to changes in the level of market interest rates,
changes in mortgage prepayments and interest rate volatility.
Options, futures, fonvards, swaps, swaptions, U.S. Treasury securi-
ties and mortgage-backed securities are used to hedge mortgage risk
by seeking to mitigate the effects of changes in interest rates.
Equity Market Risk
Equity market risk arises from exposure to securities that represent an
ownership interest in a corporation in the form of common stock or other
equity-linked instruments. The instruments held that would lead to this
exposure include, but are not limited to, the following: common stock,
listed equity options (puts and calls), over-the-counter equity options,
equity total return swaps, equity index futures and convertible bonds. We
seek to mitigate the risk associated with these securities via hedging on
a portfolio or name basis that focuses on reducing volatility from
changes in stock prices. Instruments used for risk mitigation include
options, futures, swaps, convertible bonds and cash positions.
Commodity Risk
Commodity risk represents exposures we have to products traded in the
petroleum, natural gas, metals and power markets. Our principal expo-
sure to these markets emanates from customer-driven transactions.
These transactions consist primarily of futures, forwards, swaps and
options. We seek to mitigate exposure to the commodity markets with
instruments including, but not limited to, options, futures and swaps in
the same or similar commodity product, as well as cash positions.
Issuer Credit Risk
Our portfolio is exposed to issuer credit risk where the value of an
asset may be adversely impacted for various reasons directly related
to the issuer, such as management performance, financial leverage
or reduced demand for the issuer's goods or services. Perceived
changes in the creditworthiness of a particular debtor or sector can
have significant effects on the replacement costs of both cash and
derivative positions. We seek to mitigate the impact of credit
spreads, credit migration and default risks on the market value of the
trading portfolio with the use of credit default swaps, and credit fixed
income and similar securities.
BANK OF AMERICA 2004 73
�
�
•
•
�
�
Trading Risk Management
Trading-related revenues represent the amount earned from our trading
positions, which include trading account assets and liabilities, as well
as derivative positions and, prior to the conversion of the Certificates
into MSRs, market value adjustments to the Certificates and the
MSRs. Trading positions are taken in a diverse range of financial
instruments and markets. Trading account assets and liabilities, and
derivative positions are reported at fair value. MSRs are reported at
lower of cost or market. For more information on fair value, see
Complex Accounting Estimates beginning on page 78. For additional
information on MSRs, see Notes 1 and 8 of the Consolidated
Financial Statements. Trading Account Profits represent the net
amount earned from our trading positions and, as reported in the
Consolidated Statement of Income, do not include the Net Interest
Income recognized on trading positions, or the related funding charge
or benefit. Trading Account Profits can be volatile and are largely
driven by general market conditions and customer demand. Trading
Account Profits are dependent on the volume and type of transactions,
the level of risk assumed, and the volatility of price and rate movements
at any given time within the ever�hanging market environment.
80
70
� 60
�,
0 50
� 40
d
a
E 30
�
Z 20
10
The histogram of daily revenue or loss below is a graphic
depiction of trading volatility and illustrates the level of trading-
related revenue for 2004. Trading-related revenue encompasses both
proprietary trading and customer-related activities. In 2004, positive
trading-related revenue was recorded for 87 percent of trading days.
Furthermore, only five percent of the total trading days had losses
greater than $10 million, and the largest loss was $27 million. This
can be compared to 2003 and 2002 as follows:
• In 2003, positive trading-related revenue was recorded for 88
percent of trading days and only four percent of total trading
days had losses greater than $10 million, and the largest loss
was $41 million.
• In 2002, positive trading-related revenue was recorded for 86
percent of trading days and only five percent of total trading
days had losses greater than $10 million, and the largest loss
was $32 million.
Hstogra,m of Da,ily'Ilading-related Revenue
Twelve Months Ended December 31, 2004
<-50 -50 to -40 -40 to 30 -30 to -20 -20 to -SO -10 to 0 0 to 10 10 to 20 20 to 30 30 to 40 40 to 50 > 50
Revenue
(Dollars in millions)
The above histogram does not include two losses greater than
$50 million associated with MSRs as the losses were related to
model changes rather than market changes in the portfolio. For
additional information on MSRs, see Notes 1 and 8 of the
Consolidated Financial Statements.
To evaluate risk in our trading activities, we focus on the actual
and potential volatility of individual positions as well as portfolios. At
a portfolio and corporate level, we use Value-at-Risk (VAR) modeling
and stress testing. VAR is a key statistic used to measure and man-
age market risk. Trading limits and VAR are used to manage day-to-
day risks and are subject to testing where we compare expected
performance to actual performance. This testing provides us a view
of our models' predictive accuracy. All limit excesses are communicated
to senior management for review.
74 BANK OF AMERICA 2004
A VAR model estimates a range of hypothetical scenarios within
which the next day's profit or loss is expected. These estimates are
impacted by the nature of the positions in the portfolio and the cor-
relation within the portfolio. Within any VAR model, there are signifi-
cant and numerous assumptions that will differ from company to
company. Our VAR model assumes a 99 percent confidence level.
Statistically this means that losses will exceed VAR, on average, one
out of 100 trading days, or two to three times each year.
In addition to reviewing our underlying model assumptions with
senior management, we seek to mitigate the uncertainties related to
these assumptions and estimates through close monitoring and by
updating the assumptions and estimates on an ongoing basis. If the
results of our analysis indicate higher than expected levels of risk,
proactive measures are taken to adjust risk levels.
The following graph shows actual losses did not exceed VAR in 2004. Actual losses exceeded VAR twice during 2003.
ioo
eo
60
� 40
2�
E O
- -�o
� �o
60
-80
-100
Trading Risk and Return
Daily VAR and Trading-related Revenue
� _� �I
�,R1111�71�1111���II�Ai1�111�1111i1�����11� , �
��i������►�►i��ur�►,��► �u�i�r�iii��►�����,�u��►�u���.W►.�in��r�ui►ir��u� ���u►.�►��►���n
' '�V'�rtlr� �1'r■
� � .. �•� � -. ,. �, r ,.i - -�- -- - - ' � ��/. .
��� �
12/31/03 3/31/04
6/30/04
Table 26 presents average, high and low daily VAR for 2004 and 2003.
Table 26 Trading Activities Market Risk
(Dollars in millions)
Foreign exchange
Interest rate
Credit�2�
Real estate/mortgagecs�
Equities
Commodities
Portfolio diversification
Total trading portfolio
Total market-based trading portfolioc4�
Average
VAR
$ 3.6
26.2
35.7
10.5
21.8
6.5
(56.3)
$ 48.0
$ 44.1
2004
High
VAR�1�
$ 8.1
51.5
61.4
26.0
51.5
10.2
$ 78.5
$ 79.0
9/30/04
Twelve Months Ended December 31
Low
VAR�1�
$ 1.4
10.7
21.9
4.6
7.9
3.8
$ 29.4
$ 23.7
Average
VAR
$ 4.1
27.0
20.7
14.1
19.9
8.7
(60.9)
$ 33.6
$ 33.2
Daily Trading-
related Revenue
VAR
12/31/04
2003
High
VAR(1I
$ 7.8
65.2
32.6
41.4
53.8
19.3
$ 91.0
$ 82.0
�11 The high and low for the total portfolio may not equal the sum of the intlividual components as the highs or lows of the individual portfolios may have occurred on different trading days.
�2� Credit includes cretlit fixetl income antl cre0it tlefault swaps usetl for cretlit risk management. Average VAR for credit default swaps was $23.5 and $20.9 in 2004 and 2003, respectively.
(31 Real estate/mortgage includes capital market real estate antl the Certificates. Effective June 1, 2004, Real estate/mortgage no longer includes the Certifcates. For additional information on the
Certificates, see Note 1 of the Consolitlated Financial Statements.
�4� Total market-basetl tratling portfolio excludes credit default swaps used for credit risk management, net of the effect of diversification.
Approximately $4 million of the increase in average VAR for 2004 was
attributable to the addition of FleetBoston in the second quarter of
2004. The remaining increase in average VAR for 2004 was primarily
due to increases in the average risk taken in credit and equities. The
increase in equities was mainly due to the increased economic risk
from customer-facilitated transactions that were held in inventory dur-
ing portions of 2004. The increase in credit was mainly due to an
increase in credit protection purchased to hedge the credit risk in our
commercial credit portfolio.
Low
VAR(11
$ 2.1
15.1
14.9
3.6
6.6
4.1
$ 11.2
$ 11.8
Stress Testing
Because the very nature of a VAR model suggests results can exceed
our estimates, we "stress test" our portfolio. Stress testing estimates
the value change in our trading portfolio due to abnormal market
movements. Various stress scenarios are run regularly against the
trading portfolio to verify that, even under extreme market moves, we
will preserve our capital; to determine the effects of significant his-
torical events; and to determine the effects of specific, extreme hypo-
thetical, but plausible events. The results of the stress scenarios are
calculated daily and reported to senior management as part of the
regular reporting process. The results of certain specific, extreme
hypothetical scenarios are presented to ALCO.
BANK OF AMERICA 2004 75
•
�
•
u
�
\ J
Interest Rate Risk Management
Interest rate risk represents the most significant market risk exposure
to our nontrading financial instruments. Our overall goal is to manage
interest rate sensitivity so that movements in interest rates do not
adversely affect Net Interest Income. Interest rate risk is measured
as the potential volatility in our Net Interest Income caused by
changes in market interest rates. Client facing activities, primarily
lending and deposit-taking, create interest rate sensitive positions on
our Balance Sheet. Interest rate risk from these activities as well as
the impact of ever-changing market conditions, is mitigated using the
ALM process.
Sensitivity simulations are used to estimate the impact on Net
Interest Income of numerous interest rate scenarios, balance sheet
trends and strategies. These simulations estimate levels of short-
term financial instruments, debt securities, loans, deposits, borrow-
ings and derivative instruments. In addition, these simulations
incorporate assumptions about balance sheet dynamics such as loan
and deposit growth and pricing, changes in funding mix, and asset
and liability repricing and maturity characteristics. In addition to Net
Interest Income sensitivity simulations, market value sensitivity
measures are also utilized.
The Balance Sheet Management group maintains a Net Interest
Income forecast utilizing different rate scenarios, with the base case
utilizing the forward market curve. The Balance Sheet Management
group constantly updates the Net Interest Income forecast for chang-
ing assumptions and differing outlooks based on economic trends
and market conditions.
The Balance Sheet Management group reviews the impact on
Net Interest Income of parallel and nonparallel shifts in the yield curve
over different time horizons. The overall interest rate risk position and
strategies are reviewed on an ongoing basis with ALCO. At December
31, 2004, we remain positioned for future rising interest rates and
curve flattening to the extent implied by the fonvard market curve.
The estimated impact to Net Interest Income over the subse-
quent year from December 31, 2004, resulting from a 100 bp grad-
ual (over 12 months) parallel increase or decrease in interest rates
from the forward market curve calculated as of December 31, 2004
was (1.5) percent and 0.5 percent, respectively. The estimated
impact to Net interest Income over the subsequent year from
December 31, 2003, resulting from a 100 bp gradual (over 12
months) parallel increase or decrease in interest rates from the for-
ward market curve calculated as of December 31, 2003, was (1.1)
percent and 1.2 percent, respectively.
As part of the ALM process, we use securities, residential
mortgages, and interest rate and foreign exchange derivatives in
managing interest rate sensitivity.
76 BANK OF AMERICA 2004
Securities
The securities portfolio is integral to our ALM process. The decision
to purchase or sell securities is based upon the current assessment
of economic and financial conditions, including the interest rate envi-
ronment, liquidity and regulatory requirements, and the relative mix of
our cash and derivative positions. During 2004 and 2003, we pur-
chased securities of $232.6 billion and $195.9 billion, respectively,
sold $105.0 billion and $171.5 billion, respectively, and received pay-
downs of $31.8 billion and $27.2 billion, respectively. Not included in
the purchases above were $46.7 billion of forward purchase con-
tracts of both mortgage-backed securities and mortgage loans at
December 31, 2004 settling from January 2005 to February 2005
with an average yield of 5.26 percent, and $65.2 billion of forward
purchase contracts of both mortgage-backed securities and mort-
gage loans at December 31, 2003 that settled from January 2004 to
February 2004 with an average yield of 5.79 percent. There were also
$25.8 billion of forward sale contracts of mortgage-backed securities
at December 31, 2004 settling from January 2005 to February 2005
with an average yield of 5.47 percent compared to $8.0 billion at
December 31, 2003 that settled in February 2004 with an average
yield of 6.14 percent. These forward purchase and sale contracts
were accounted for as derivatives and designated as cash flow
hedges with their net-of-tax unrealized gains and losses included in
Accumulated Other Comprehensive Income (OCI). For additional infor-
mation on derivatives designated as cash flow hedges, see Note 4 of
the Consolidated Financial Statements. The forward purchase and
sale contracts at December 31, 2004 and 2003 were also included in
Table IV on pages 88 and 89. During the year, we continuously moni-
tored the interest rate risk position of the portfolio and repositioned
the securities portfolio in order to manage prepayment risk and to take
advantage of interest rate fluctuations. Through sales in the securities
portfolio, we realized $2.1 billion and $941 million in Gains on Sales
of Debt Securities in 2004 and 2003, respectively.
Residential Mortgage Portfolio
In 2004 and 2003, we purchased $65.9 billion and $92.8 billion,
respectively, of residential mortgages for our ALM portfolio and inter-
est rate risk management. Not included in the purchases above were
$3.3 billion of forward purchase commitments of mortgage loans at
December 31, 2004 settling from January 2005 to February 2005
and $4.6 billion at December 31, 2003 that settled in January 2004.
These commitments, included in Table IV on pages 88 and 89, were
accounted for as derivatives and designated as cash flow hedges,
and their net-of-tax unrealized gains and losses were included in
Accumulated OCI. During 2004, there were no sales of whole mort-
gage loans. In 2003, we sold $27.5 billion of whole mortgage loans
and recognized $772 million in gains on the sales included in Other
Noninterest Income. Additionally, during the same periods, we
received paydowns of $44.4 billion and $62.8 billion, respectively.
Interest Rate and Foreign Exchange Derivative Contracis
Interest rate and foreign exchange derivative contracts are utilized in
our ALM process and serve as an efficient, low-cost tool to mitigate
our risk. We use derivatives to hedge or offset the changes in cash
flows or market values of our Balance Sheet. See Note 4 of the
Consolidated Financial Statements for additional information on our
hedging activities.
Our interest rate contracts are generally nonleveraged generic
interest rate and basis swaps, options, futures, and forwards. In addi-
tion, we use foreign currency contracts to mitigate the foreign
exchange risk associated with foreign currency-denominated assets
and liabilities, as well as our equity investments in foreign sub-
sidiaries. Table IV, on pages 88 and 89, reflects the notional
amounts, fair value, weighted average receive fixed and pay fixed
rates, expected maturity, and estimated duration of our ALM deriva-
tives at December 31, 2004 and 2003.
Consistent with our strategy of managing interest rate sensitiv-
ity to mitigate changes in value of other financial instruments, the
notional amount of our net received fixed interest rate swap position
decreased $11.7 billion to $9.5 billion at December 31, 2004 com-
pared to December 31, 2003. The net option position increased
$238.9 billion to $323.8 billion at December 31, 2004 compared to
December 31, 2003 to offset interest rate risk in other portfolios.
The changes in our swap and option positions were part of our interest
sensitivity management.
Mortgage Banking Risk Management
We manage changes in the value of MSRs by entering into derivative
financial instruments and by purchasing and selling securities. MSRs
are assets created when the underlying mortgage loan is sold to
investors and we retain the right to service the loan. As of December
31, 2004, the MSR balance was $2.5 billion, or 10 percent lower
than December 31, 2003.
We designate certain derivatives such as purchased options
and interest rate swaps as fair value hedges of specified MSRs under
SFAS 133. At December 31, 2004, the amount of MSRs identified as
being hedged by derivatives in accordance with SFAS 133 was
approximately $1.8 billion. The notional amount of the derivative con-
tracts designated as SFAS 133 hedges of MSRs at December 31,
2004 was $18.5 billion. The changes in the fair values of the deriv-
ative contracts are substantially offset by changes in the fair values
of the MSRs that are hedged by these derivative contracts. During
2004, derivative hedge gains of $228 million were offset by a
decrease in the value of the MSRs of $210 million resulting in $18
million of hedge ineffectiveness.
From time to time, we hold additional derivatives and certain
securities (i.e. mortgage-backed securities) as economic hedges of
MSRs, which are not designated as SFAS 133 accounting hedges.
During 2004, Gains on Sales of Debt Securities of $117 million and
$65 million of Interest Income from Securities used as an economic
hedge of MSRs were realized. At December 31, 2004, the amount of
MSRs covered by such economic hedges was $564 million. The car-
rying value of AFS securities held as economic hedges of MSRs was
$1.9 billion at December 31, 2004. The related net-of-tax unrealized
gain on these AFS securities, which is recorded in Accumulated OCI,
was $13 million at December 31, 2004.
See Notes 1 and 8 of the Consolidated Financial Statements for
additional information.
BANK OF AMERICA 2004 77
•
�
•
•
�
•
Operational Risk Management
Operational risk is the risk of loss resulting from inadequate or failed
internal processes, people and systems, including system conver-
sions and integration, and external events. Successful operational
risk management is particularly important to a diversified financial
services company like ours because of the very nature, volume and
complexity of our various businesses.
In keeping with our management governance structure, the lines
of business are responsible for all the risks within the business
including operational risks. Such risks are managed through corpo-
rate-wide or line of business specific policies and procedures, con-
trols, and monitoring tools. Examples of these include personnel
management practices, data reconciliation processes, fraud man-
agement units, transaction processing monitoring and analysis, busi-
ness recovery planning, and new product introduction processes.
We approach operational risk from two perspectives, enterprise-
wide and line of business-specific. The Compliance and Operational
Risk Committee (CORC), chartered in 2005 as a subcommittee of the
Finance Committee, provides consistent communication and over-
sight of significant operational and compliance issues and oversees
the adoption of best practices. Two groups within Risk Management,
Compliance Risk Management and Enterprise Operational Risk, facil-
itate the consistency of effective policies, industry best practices,
controls and monitoring tools for managing and assessing opera-
tional risks across the Corporation. These groups also work with the
line of business executives and their risk counterparts to implement
appropriate policies, processes and assessments at the line of busi-
ness level and support groups. Compliance and operational risk
awareness is also driven across the Corporation through training and
strategic communication efforts. For selected risks, we establish spe-
cialized support groups, for example, Information Security and Supply
Chain Management. These specialized groups develop corporate-
wide risk management practices, such as an information security pro-
gram and a supplier program to ensure suppliers adopt appropriate
policies and procedures when performing work on behalf of the
Corporation. These specialized groups also assist the lines of busi-
ness in the development and implementation of risk management
practices specific to the needs of the individual businesses.
At the line of business level, the Line of Business Risk
Executives are responsible for adherence to corporate practices and
oversight of all operational risks in the line of business they support.
Operational and compliance risk management, working in conjunction
with senior line of business executives, have developed key tools to
help manage, monitor and summarize operational risk. One tool the
businesses and executive management utilize is a corporate-wide
78 BANK OF AMERICA 2004
self-assessment process, which helps to identify and evaluate the
status of risk issues, including mitigation plans, if appropriate. Its
goal is to continuously assess changing market and business condi-
tions and evaluate all operational risks impacting the line of busi-
ness. The self-assessment process assists in identifying emerging
operational risk issues and determining at the line of business or cor-
porate level how they should be managed. In addition to information
gathered from the self-assessment process, key operational risk indi-
cators have been developed and are used to help identify trends and
issues on both a corporate and a line of business level.
More generally, we mitigate operational risk through a broad-
based approach to process management and process improvement.
Improvement efforts are focused on reduction of variation in outputs.
We have a dedicated Quality and Productivity team to manage and
certify the process management and improvement efforts.
Recent Accounting and Reporting Developments
See Note 1 of the Consolidated Financial Statements for a discussion
of recent accounting and reporting developments.
Complex Accounting Estimates
Our significant accounting principles as described in Note 1 of the
Consolidated Financial Statements are essential in understanding
Management's Discussion and Analysis of Results of Operations and
Financial Condition. Many of our significant accounting principles require
complexjudgments to estimate values of assets and liabilities. We have
procedures and processes to facilitate making these judgments.
The morejudgmental estimates are summarized below. We have
identified and described the development of the variables most
important in the estimation process that, with the exception of
accrued taxes, involves mathematical models to derive the esti-
mates. In many cases, there are numerous alternative judgments
that could be used in the process of determining the inputs to the
model. Where alternatives exist, we have used the factors that we
believe represent the most reasonable value in developing the
inputs. Actual performance that differs from our estimates of the key
variables could impact Net Income. Separate from the possible future
impact to Net Income from input and model variables, the value of
our lending portfolio and market sensitive assets and liabilities may
change subsequent to the balance sheet measurement, often signif-
icantly, due to the nature and magnitude of future credit and market
conditions. Such credit and market conditions may change quickly
and in unforeseen ways and the resulting volatility could have a sig-
nificant, negative effect on future operating results. These fluctuations
would not be indicative of deficiencies in our models or inputs.
Allowance for Credit Losses
The allowance for credit losses is our estimate of probable losses in
the loans and leases portfolio and within our unfunded lending
commitments. Changes to the allowance for credit losses are
reported in the Consolidated Statement of Income in the Provision for
Credit Losses. Our process for determining the allowance for credit
losses is discussed in the Credit Risk Management section beginning
on page 58 and Note 1 of the Consolidated Financial Statements.
Due to the variability in the drivers of the assumptions made in this
process, estimates of the portfolio's inherent risks and overall col-
lectibility change with changes in the economy, individual industries,
countries and individual borrowers' or counterparties' ability and will-
ingness to repay their obligations. The degree to which any particular
assumption affects the allowance for credit losses depends on the
severity of the change and its relationship to the other assumptions.
Keyjudgments used in determiningthe allowance for credit losses
include: (i) risk ratings for pools of commercial loans and leases,
(ii) market and collateral values and discount rates for individually
evaluated loans, (iii) product type classifications for both consumer and
commercial loans and leases, (iv) loss rates used for both consumer
and commercial loans and leases, (v) adjustments made to assess
current events and conditions, (vi) considerations regarding domestic
and global economic uncertainty, and (vii) overall credit conditions.
Our Allowance for Loan and Lease Losses is sensitive to the
risk rating assigned to commercial loans and leases and to the loss
rates used for both the consumer and commercial portfolios.
Assuming a downgrade of one level in the internal risk rating for com-
mercial loans and leases, except loans already risk rated Doubtful as
defined by regulatory authorities, the Allowance for Loan and Lease
Losses for the commercial portfolio would increase by approximately
$1.6 billion at December 31, 2004. The Allowance for Loan and
Lease Losses as a percentage of loan and lease outstandings at
December 31, 2004 was 1.65 percent and this hypothetical increase
in the allowance would raise the ratio to approximately 2.0 percent.
A 10 percent increase in the loss rates used on both the consumer
and commercial loan and lease portfolios would increase the
Allowance for Loan and Lease Losses at December 31, 2004 by
approximately $370 million, of which $250 million would relate to
consumer and $120 million to commercial.
These sensitivity analyses do not represent managemenYs
expectations of the deterioration in risk ratings or the increases in
loss rates but are provided as hypothetical scenarios to assess the
sensitivity of the Allowance for Loan and Lease Losses to changes in
key inputs. We believe the risk ratings and loss severities currently in
use are appropriate and that the probability of a downgrade of one
level of the internal credit ratings for commercial loans and leases
within a short period of time is remote.
The process of determining the level of the allowance for credit
losses requires a high degree ofjudgment. It is possible that others,
given the same information, may at any point in time reach different
reasonable conclusions.
Fair Value of Financial Instruments
Trading Account Assets and Liabilities are recorded at fair value,
which is primarily based on actively traded markets where prices are
based on either direct market quotes or observed transactions.
Liquidity is a significant factor in the determination of the fair value
of Trading Account Assets or Liabilities. Market price quotes may not
be readily available for some positions, or positions within a market
sector where trading activity has slowed significantly or ceased.
Situations of illiquidity generally are triggered by the market's per-
ception of credit uncertainty regarding a single company or a specific
market sector. In these instances, fair value is determined based on
limited available market information and other factors, principally
from reviewing the issuer's financial statements and changes in
credit ratings made by one or more rating agencies. At December 31,
2004, $4.4 billion of Trading Account Assets were fair valued using
these alternative approaches, representing five percent of total
Trading Account Assets at December 31, 2004. An immaterial
amount of Trading Account Liabilities were fair valued using these
alternative approaches at December 31, 2004.
Trading Account Profits, which represent the net amount earned
from our trading positions, can be volatile and are largely driven by
general market conditions and customer demand. Trading Account
Profits are dependent on the volume and type of transactions, the
level of risk assumed, and the volatility of price and rate movements
at any given time. To evaluate risk in our trading activities, we focus
on the actual and potential volatility of individual positions as well as
portfolios. At a portfolio and corporate level, we use trading limits,
stress testing and tools such as VAR modeling, which estimates a
range within which the next day's profit or loss is expected, to measure
and manage market risk. At December 31, 2004, the amount of our
VAR was $47 million based on a 99 percent confidence interval. For
more information on VAR, see pages 74 and 75.
The fair values of Derivative Assets and Liabilities traded in the
over-the-counter market are determined using quantitative models
that require the use of multiple market inputs including interest
rates, prices and indices to generate continuous yield or pricing
curves and volatility factors, which are used to value the position. The
predominance of market inputs are actively quoted and can be vali-
dated through external sources, including brokers, market transac-
tions and third-party pricing services. Estimation risk is greater for
derivative asset and liability positions that are either option-based or
have longer maturity dates where observable market inputs are less
readily available or are unobservable, in which case quantitative-
based extrapolations of rate, price or index scenarios are used in
determining fair values.
BANK OF AMERICA 2004 79
\ J
�
•
•
•
�
The fair values of Derivative Assets and Liabilities include
adjustments for market liquidity, counterparty credit quality, future
servicing costs and other deal specific factors, where appropriate. To
ensure the prudent application of estimates and management judg-
ment in determining the fair value of Derivative Assets and Liabilities,
various processes and controls have been adopted, which include: a
Model Validation Policy that requires a review and approval of quanti-
tative models used for deal pricing, financial statement fair value
determination and risk quantification; a Trading Product Valuation
Policy that requires verification of all traded product valuations; and
a periodic review and substantiation of daily profit and loss reporting
for all traded products. These processes and controls are performed
independently within the business segment. At December 31, 2004,
the fair values of Derivative Assets and Liabilities determined by
these quantitative models were $10.3 billion and $7.3 billion, respec-
tively. These amounts reflect the full fair value of the derivatives and
do not isolate the discrete value associated with the subjective valu-
ation variable. Further, they represent five percent and four percent of
Derivative Assets and Liabilities, respectively, before the impact of
legally enforceable master netting agreements. For the period ended
December 31, 2004, there were no changes to the quantitative mod-
els, or uses of such models, that resulted in a material adjustment
to the Consolidated Statement of Income.
AFS Securities are recorded at fair value, which is generally
based on direct market quotes from actively traded markets.
Principal Investing
Principal Investing is included within Equity Investments and is dis-
cussed in more detail in Business Segment Operations on page 50.
Principal Investing is comprised of a diversified portfolio of invest-
ments in privately-held and publicly-traded companies at all stages,
from start-up to buyout. These investments are made either directly
in a company or held through a fund. Some of these companies may
need access to additional cash to support their long-term business
models. Market conditions and company performance may impact
whether funding is available from private investors or the capital
markets.
SO BANK OF AMERICA 2004
Investments with active market quotes are carried at estimated
fair value; however, the majority of our investments do not have
publicly available price quotations. At December 31, 2004, we had
nonpublic investments of $7.0 billion, or approximately 96 percent of
the total portfolio. Valuation of these investments requires significant
management judgment. Management determines values of the
underlying investments based on multiple methodologies including
in-depth semi-annual reviews of the investee's financial statements
and financial condition, discounted cash flows, the prospects of the
investee's industry, and current overall market conditions for similar
investments. In addition, on a quarterly basis as events occur or
information comes to the attention of management that indicates a
change in the value of an investment is warranted, investments are
adjusted from their original invested amount to estimated fair values
at the balance sheet date with changes being recorded in Equity
Investment Gains (Losses) in the Consolidated Statement of Income.
Investments are not adjusted above the original amount invested
unless there is clear evidence of a fair value in excess of the original
invested amount. This evidence is often in the form of a recent trans-
action in the investment. As part of the valuation process, senior
management reviews the portfolio and determines when an impair-
ment needs to be recorded. The Principal Investing portfolio is not
material to our Consolidated Balance Sheet, but the impact of the
valuation adjustments may be material to our operating results for
any particular quarter.
Accrued Income Taxes
As more fully described in Notes 1 and 17 of the Consolidated
Financial Statements, we account for income taxes in accordance
with SFAS No. 109, "Accounting for Income Taxes" (SFAS 109).
Accrued income taxes, reported as a component of Accrued
Expenses and Other Liabilities on our Consolidated Balance Sheet,
represents the net amount of current income taxes we expect to pay
to or receive from various taxingjurisdictions attributable to our oper-
ations to date. We currently file income tax returns in more than 100
jurisdictions and consider many factors—including statutory, judicial
and regulatory guidance—in estimating the appropriate accrued
income taxes for each jurisdiction.
In applying the principles of SFAS 109, we monitor the state of
relevant tax authorities and change our estimate of accrued income
taxes due to changes in income tax laws and their interpretation by
the courts and regulatory authorities. These revisions of our estimate
of accrued income taxes, which also may result from our own income
tax planning and from the resolution of income tax controversies, can
materiatly affect our operating results for any given quarter.
Goodwill
The nature of and accounting for Goodwill is discussed in detail in
Notes 1 and 9 of the Consolidated Financial Statements. Goodwill is
reviewed for potential impairment at the reporting unit level on an
annual basis, or in interim periods if events or circumstances indicate
a potential impairment. The reporting units utilized for this test were
those that are one level below the business segments identifed on
page 40. The impairment test is performed in two phases. The first
step of the Goodwill impairment test compares the fair value of the
reporting unit with its carrying amount, including Goodwill. If the fair
value of the reporting unit exceeds its carrying amount, Goodwill of
the reporting unit is considered not impaired; however, if the carrying
amount of the reporting unit exceeds its fair value, an additional pro-
cedure must be performed. That additional procedure compares the
implied fair value of the reporting unit's Goodwill (as defined in SFAS
142) with the carrying amount of that Goodwill. An impairment loss
is recorded to the extent that the carrying amount of Goodwill
exceeds its implied fair value.
The fair values of the reporting units were determined using a
combination of valuation techniques consistent with the income
approach and the market approach. For purposes of the income
approach, discounted cash flows were calculated by taking the net
present value of estimated cash flows using a combination of histor-
ical results, estimated future cash flows and an appropriate price to
earnings multiple. We use our internal forecasts to estimate future
cash flows and actual results may differ from forecasted results.
However, these differences have not been material and we believe
that this methodology provides a reasonable means to determine fair
values. Cash flows were discounted using a discount rate based on
expected equity return rates, which was 11 percent for 2004.
Expected rates of equity returns were estimated based on historical
market returns and risk/return rates for similar industries of the
reporting unit. For purposes of the market approach, valuations of
reporting units were based on actual comparable market transac-
tions and market earnings multiples for similar industries of the
reporting unit.
Our evaluations for the year ended December 31, 2004 indicated
there was no impairment of our Goodwill.
2003 Compared to 2002
The following discussion and analysis provides a comparison of our
results of operations for 2003 and 2002. This discussion should be
read in conjunction with the Consolidated Financial Statements and
related Notes on pages 96 through 150. In addition, Tables 1 and 2
contain financial data to supplement this discussion.
Overview
Net Income
Net Income totaled $10.8 billion, or $3.57 per diluted common
share, in 2003 compared to $9.2 billion, or $2.95 per diluted com-
mon share, in 2002. The return on average common shareholders'
equity was 21.99 percent in 2003 compared to 19.44 percent in
2002. These earnings provided sufficient cash flow to allow us to
return $9.8 billion and $8.5 billion in 2003 and 2002, respectively,
in capital to shareholders in the form of dividends and share
repurchases, net of employee stock options exercised.
Net Interest Income
Net Interest Income on a FTE basis increased $596 million to $22.1
billion in 2003. This increase was driven by higher ALM portfolio lev-
els (consisting of securities, whole loan mortgages and derivatives),
higher consumer loan levels, larger trading-related contributions,
higher mortgage warehouse and higher core deposit funding levels.
Partially offsetting these increases was the impact of lower interest
rates and reductions in the large corporate, foreign and exited con-
sumer loan businesses portfolios. The net interest yield on a FfE
basis declined 37 bps to 3.40 percent in 2003 due to the negative
impact of increases in lower-yielding trading-related assets and declin-
ing rates offset partially by our ALM portfolio repositioning.
Noninterest Income
Noninterest Income increased $2.9 billion to $16.5 billion in 2003,
due to increases in Mortgage Banking Income of $1.2 billion, Equity
Investment Gains of $495 million, Other Noninterest Income of $484
million, Card Income of $432 million, and Service Charges of $342
million. The increase in Mortgage Banking Income was driven by
gains from higher volumes of mortgage loans sold into the secondary
market and improved profit margins. Other Noninterest Income of
$1.1 billion included gains of $772 million, an increase of $272 million
over 2002, as we sold whole loan mortgages to manage prepayment
risk due to the longer than anticipated low interest rate environment.
Additionally, Other Noninterest Income included the equity in the
earnings of our investment in GFSS of $122 million.
BANK OF AMERICA 2004 Sl
•
�
•
•
I �
�_J
•
Gains on Sales of Debt Securities
Gains on Sales of Debt Securities in 2003 and 2002, were $941 million
and $630 million, respectively, as we continued to reposition the ALM
portfolio in response to interest rate fluctuations.
Provision for Credit Losses
The Provision for Credit Losses declined $858 million to $2.8 billion in
2003 due to an improvement in the commercial portfolio partially off-
set by a stable but growing consumer portfolio. This improvement was
driven by reduced levels of inflows to nonperforming assets in Global
Capital Markets and Investment Banking, together with loan sales and
payoffs facilitated by high levels of liquidity in the capital markets.
Noninterest Expense
Noninterest Expense increased $1.7 billion in 2003 from 2002,
driven by higher personnel costs, increased Professional Fees includ-
ing legal expense and increased Marketing Expense. Higher person-
nel costs resulted from increased costs of employee benefits of
$504 million and revenue-related incentives of $435 million.
Employee benefits expense increased due to stock option expense of
$120 million in 2003 and the impacts of a change in the expected
long-term rates of return on plan assets to 8.5 percent for 2003 from
9.5 percent in 2002 and a change in the discount rate to 6.75 per-
cent in 2003 from 7.25 percent in 2002 for the Bank of America
Pension Plan. The increase in Professional Fees of $319 million was
driven by an increase in litigation accruals of $220 million associated
with pending litigation principally related to securities matters.
Marketing Expense increased by $232 million due to higher advertis-
ing costs, as well as marketing investments in direct marketing for
the credit card business. In addition, recorded in other expense dur-
ing 2003 was a$100 million charge related to issues surrounding
our mutual fund practices.
82 BANK OF AMERICA 2004
Income Tax Expense
Income Tax Expense was $5.1 billion, reflecting an effective tax rate
of 31.8 percent, in 2003 compared to $3.7 billion and 28.8 percent,
respectively, in 2002. The 2002 effective tax rate was impacted by a
$488 million reduction in Income Tax Expense resulting from a set-
tlement with the IRS generally covering tax years ranging from 1984
to 1999 but including tax returns as far back as 1971.
Business Segment Operations
Global Consumer and Small Business Banking
Total Revenue increased $2.6 bitlion, or 14 percent, in 2003 compared
to 2002. Overall deposit and loan growth contributed to the $703 million,
or six percent, increase in Net Interest Income. This increase was off-
set by the compression of deposit interest margins and the results of
ALM activities. Increases in Mortgage Banking Income of 118 percent,
Service Charges of 14 percent and Card Income of 17 percent drove
the $1.9 billion, or 28 percent, increase in Noninterest Income.
These increases were offset by a decrease in Trading Account Profits.
Net Income rose $965 million, or 20 percent, due to the increases in
Net Interest Income and Noninterest Income discussed above, offset
by an increase in the Provision for Credit Losses. Higher provision in
the credit card loan portfolio, offset by a decline in provision for other
consumer loans resulted in a$157 million, or 10 percent, increase
in the Provision for Credit Losses.
Global Business and Financial Services
Total Revenue increased $108 million, or two percent, in 2003
compared to 2002. Net Interest Income decreased $77 million, or
two percent. Increases in Other Noninterest Income of 58 percent,
Service Charges of seven percent and Investment Banking Income of
seven percent drove the $185 million, or 15 percent, increase in
Noninterest Income. These increases were offset by a decrease in
Trading Account Profits. Provision for Credit Losses remained rela-
tively flat. Net Income rose $102 million, or seven percent, due to the
increase in Noninterest Income discussed above, offset by the
decrease in Net Interest Income.
Global Capital Markets and Investment Banking
Total Revenue increased $133 million, or two percent, in 2003
compared to 2002 driven by an increase in Noninterest Income. Net
Interest Income remained relatively flat at $4.3 billion as average
Loans and Leases declined $12.0 billion, or 25 percent and average
Deposits increased $1.4 billion, or two percent. Noninterest Income
increased $189 million, or five percent, resulting from increases in
Investment Banking Income, Service Charges, Investment and
Brokerage Services, and Equity Investment Gains offset by declines
in Trading Account Profits. In 2003, Net Income increased $192 million,
or 12 percent, due to the increase in Noninterest Income and lower
Provision for Credit Losses offset by an increase in Noninterest
Expense. Provision for Credit Losses declined $465 million to $303
million due to continued improvements in credit quality. Noninterest
Expense increased by $402 million, or eight percent, driven by costs
associated with downsizing operations in South America and Asia
and restructuring locations outside the U.S., higher market-based
compensation, increases in litigation expenses and reserves, and the
allocation of the charge related to issues surrounding our mutual
fund practices.
Global Wealth and Investment Management
Total Revenue increased $401 million, or 11 percent, in 2003. Net
Interest Income remained relatively flat as growth in Deposits and
increased loan spreads were offset by the net results of ALM activi-
ties. Noninterest Income increased $372 million, or 22 percent, an
increase in Equity Investment Gains of $198 million related to gains
from securities sold that were received in satisfaction of debt that
had been restructured and charged off in prior periods, and higher
asset management fees. Net Income increased $351 million, or 40
percent. This increase was due to the increase in Noninterest Income
and lower Provision for Credit Losses. Provision for Credit Losses
decreased $309 million, driven by one large charge-off recorded in
2002. The allocation of the charge related to issues surrounding our
mutual fund practices and increased expenses associated with the
addition of financial advisors were the drivers of the $182 million, or
nine percent, increase in Noninterest Expense.
All Other
In 2003 compared to 2002, Total Revenue in Latin America
decreased $10 million, or 24 percent. Net Interest Income decreased
$11 million, or 31 percent, due to lower Loan and Lease balances.
Noninterest Income remained relatively unchanged at $9 million.
Provision for Credit Losses decreased $155 million, or 64 percent,
due to continued improvement in credit quality and Noninterest
Expense increased $12 million. As a result, Net Loss in Latin America
improved $100 million or 68 percent. Total Revenue in Equity
Investmen[s increased $190 million, or 43 percent, in 2003 com-
pared to 2002 due to an improvement in Equity Investment Gains.
Equity Investments had a Net Loss of $249 million in 2003 compared
to a Net Loss of $330 million in 2002. In 2003, Principal Investing
recorded cash gains of $273 million and fair value adjustment gains
of $47 million, offset by impairment charges of $438 million.
Noninterest Income primarily consists of Equity Investment Gains
(Losses). Total Revenue in Other increased $38 million, or four per-
cent, in 2003 compared to 2002. Net Income decreased $147 mil-
lion, or 14 percent. Net Interest Income remained relatively flat.
Noninterest Income increased $35 million resulting from increases in
gains on whole mortgage loan sales. Gains on Sales of Debt
Securities increased $235 million to $942 million in 2003, as we
continued to reposition the ALM portfolio in response to changes in
interest rates. Noninterest Expense increased $132 million, or 39
percent.
BANK OF AMERICA 2004 83
�
�
•
•
C� �
•
Statistical Financial Information
Bank of America Corporation and Subsidiaries
Ta}Jl@ I Average Balances and Interest Rates - Fully Taxable-equivalent Basis
(Dollars in millions)
Earning assets
Time deposits placed and other short-term investments
Federal funds sold and securities purchased under agreements to resell
Trading account assets
Securities
Loans and leases�l�:
Residential mortgage
Credit card
Home equity lines
Direct/Indirect consumer
Other consumert2�
Total consumer
Commercial - domestic
Commercial real estate
Commercial lease financing
Commercial - foreign
Total commercial
Total loans and leases
Other earning assets
Total eaming assets�3�
Cash and cash equivalents
Other assets, less allowance for loan and lease losses
Total assets
Interest-bearing liabilities
Domestic interest-bearing deposits:
Savings
NOW and money market deposit accounts
Consumer CDs and IRAs
Negotiable CDs, public funds and other time deposits
Total domestic interest-bearing deposits
Foreign interest-bearing deposits�4�:
Banks located in foreign countries
Governments and official institutions
Time, savings and other
Total foreign interest-bearing deposits
Total interest-bearing deposits
Federal funds purchased, securities sold under
agreements to repurchase and other short-term borrowings
Trading account liabilities
Long-term debt
Total interest-bearing liabilities�3�
Noninterest-bearing sources:
Noninterest-bearing deposits
Other liabilities
Shareholders' equity
Total Iiabilities and shareholders' equity
Net interest spread
Impact of noninterest-bearing sources
Net interest income/yield on earning assets
Average
Balance
$ 14,254
128,981
104,616
150,171
167,298
43,435
39,400
38,078
7,717
295,928
114,644
28,085
17,483
16,505
176,717
472,645
34,635
905,302
28,511
110,847
$ 1,044,660
$ 33,959
214,542
94,770
5,977
349,248
18,426
5,327
27,739
51,492
400,740
227,558
35,326
93,330
756,954
150,819
52,704
84,183
$ 1,044,660
2ooa
Interest
Income/
Expense
$ 362
2,043
4,092
7,326
9,074
4,653
1,835
2,093
594
18,249
7,126
1,263
819
849
10,057
28,306
1,814
43,943
$ 119
1,921
2,533
290
------ -----
4,863
1,040
97
275
1,412
6,275
4,434
1,317
2,404
14,430
$ 29,513
Yield/
Rate
2.54°�
1.58
3.91
4.88
5.42
10.71
4.66
5.50
7.70
6.17
6.22
4.50
4.68
5.15
5.69
5.99
5.24
4.85
0.35%
0.90
2.67
4.85
1.39
5.64
1.82
0.99
2.74
1.57
1.95
3.73
2.58
1.91
2.94
0.32
3.26%
�l� Nonpertorming loans are included in Ihe respective average loan balances. Income on these nonpeAOrming loans is recognized on a cash basis.
�2� Includes consumer finance of $3,735, $4,137 and $5,031 in 2004, 2003 and 2002, resD�tively; foreign consumer of $3,020, $1,977 and $2021 in 2004, 2003 antl 2002, respectively; and
consumer lease financing of $962, $2,751 antl $5,502 in 2004, 2003 antl 2002, respectively.
(3) Interest income inclutles the impact of interest rate n5k management contracts, which increased interes[ income on the untledying assets $2,400, $2,972 and $1,983 in 2004, 2003 antl 2002,
respectively. These amounts were subs[antialy offset by corresponding decreases in the income eamed on the underlying assets. Interest expense inclutles the impact of interest rate risk management
contracts, which increasetl interest expense on the underlying liabilities $888, $305 and 5141 in 2004. 2003 and 2002, respectively. These amounts were substantially offset by correspontling
tlecreases in the interest paid on the unaerlying liabilities. For further information on interest rate contracts, see 'Interest Rate Risk ManagemenY' beginning on page 76.
�4� Primarily consists of time deposits in tlenomina[ions of $100,000 or more.
84 BANK OF AMERICA 2004
Average
Balance
$ 9,056
78,857
97,222
70,666
127,059
28,210
22,890
32,593
8,865
219,617
93,458
20,042
10,061
12,970
136,531
356,148
37,599
649,548
22,637
76,871
$ 749,056
$ 24,538
148,896
70,246
7,627
251,307
13,959
2,218
19,027
35,204
286,511
140,458
37,176
68,432
532,577
119, 722
47,553
49,204
$ 749,056
2003
Interest
Income/
$ 172
1,373
4,005
3,131
6,872
2,886
1,040
1,964
588
13,350
6,729
862
395
460
8,446
21, 796
1,729
32,206
$ 108
1,236
2, 784
130
4,258
403
31
216
650
4,908
1,871
1,286
2,034
10,099
$22,107
Yield/
Rate
1.90%
1.74
4.12
4.43
5.41
10.23
4.55
6.03
6.63
6.08
7.20
4.30
3.92
3.54
6.19
6.12
4.60
4.96
0.44%
0.83
3.96
1.70
1.69
2.89
1.40
1.14
1.85
1.71
1.33
3.46
2.97
1.90
0.34
3.40°�
Average
Balance
$ 10,038
45,640
79,562
73,715
97,204
21,410
22,807
30,264
12,554
184,239
102,835
21,569
11,227
16,949
152,580
336,819
24,756
570,530
21,166
62,078
$ 653, 774
$ 21,691
131,841
67,695
4,237
225,464
15,464
2,316
18,769
36,549
262,013
98,477
31,600
66,045
458,135
109,466
38,560
47,613
$ 653, 774
2002
Interest
Income/
Expense
$ 243
870
3,806
4,006
6,423
2,195
1,213
2,145
930
12,906
7,011
1,060
505
678
9,254
22,160
1,557
32,642
$ 138
1,369
2,968
128
4,603
442
43
346
831
5,434
1,982
1,260
2,455
11,131
$21,511
•
Yield/
Rate
2.42°�
1.91
4.78
5.43
6.61
10.25
5.32
7.09
7.41
7.01
6.82
4.91
4.49
4.00
6.06
6.58
6.29
5.72
�
0.64°�
1.04
4.39
3.03
2.04
2.86
1.86
1.84
2.27
2.07
2.01
3.99
3.72
2.43
3.29
0.48
3.77°�
•
BANK OF AMERICA 2004 85
•
Z'able 11 Analysis of Changes in Net Interest Income - Fully Taxable-equivalent Basis
From 2003 to 2004 From 2002 to 2003
Due to Change in�l� Net __Due to Change in�l� Net
(D011ars in millions) Volume Rate Change Volume Rate Change
_ ______.____—_-- __—_.__— ___
Increase (decrease) in interest Income
Time deposits placed and other short-term investments $ 99 $ 91 $ 190 $ (24) $ (47) $ (71)
Federal funds sold and securities purchased under agreements to resell 871 (201) 670 636 (133) 503
Trading account assets 305 (218) 87 841
Securities 3,522 673 4,195 (169) (606) (875)
Loans and leases:
Residential mortgage 2,179 23 2,202 1,976 (1,527) 449
Credit card 1,557 210 1,767 697 (6) 691
Home equity lines 753 42 795 5 (178) (173)
Direct/Indirect consumer 332 (203) 129 166 (347) (181)
Other consumer (76) 82 6 (273) (69) (342)
Total consumer q,ggg qqq
Commercial – domestic 1,525 (1,128) 397 (637) 355 (282)
Commercial real estate 346 55 401 (76) (122) (198)
Commercial lease financing 290 134 424 (53) (57) (110)
_ Commercial _ foreign ___ _ _ 124 265 389 (159) (59) (218)
---------- ---------- -- -------------
Total commercial 1,611 (808)
_ Total loans and leases _ _ _ _ _ 6,510 (364)
-- ---
— -------- --- ---- --------- ----
Other earning assets_ _ _ ___ __ (136) _ 221 _ 85 _ 808 _ (636) 172
Total interest income $11,737 $ (436)
Increase (decrease) in interest expense
� Domestic interest-bearing deposits:
Savings $ 41 $ (30) $ 11 $ 19 $ (49) $ (30)
NOW and money market deposit accounts 545 140 685 180 (313) (133)
Consumer CDs and IRAs 969 (1,220) (251) 116 (300) (184)
Negotiable CDs, public funds and other time deposits (28) 188 160 103 (101) 2
Total domestic interest-bearing deposits 605 (345)
Foreign interest-bearing deposits:
Banks located in foreign countries 130 507 637 (43) 4 (39)
Governments and official institutions 44 22 66 (2) (10) (12)
Time, savings and other 100 (41) 59 4 (134) (130)
---- -- ------- ---------- --- --- --------------------------
Total foreign interest-bearing deposits 762 (181)
------ — ---- ------ — — — ------------- --------- --------_.
Total interest-bearing deposits 1,367 (526)
------ — -- --- --------.----- --------------------
Federal funds purchased, securities sold under
agreements to repurchase and other short-term borrowings 1,156 1,407 2,563 841 (952) (111)
Trading account liabilities (64) 95 31 223 (197) 26
Long-term debt 738 (368) 370 91 (512) (421)
_ Total interest expense 4,331 (1,032)
-- ------- -- -------------- -----------_—._.--------------.
Net increase in net interest income $ 7,406 $ 596
�1� The changes for each category of interest income and expense are divitletl between the portion of c�ange attributable ro the variance in volume or rate for that category. The unallocated change in rate or
volume variance has been allocated between the 2te and volume variances.
•
86 BANK OF AMERICA 2004
Tabl@ 111 Selected Loan Maturity Data�l�
(D011ars In milllons)
Commercial - domestic
Commercial real estate - domestic
Foreign(2�
Total selected loans
Percent of total
Sensitivity of loans to changes in interest rates for loans due after one year:
Fixed interest rates
Floating or adjustable interest rates
Total
�l� Loan maturities are based on the remaining maturities under contractual terms.
(2� Loan maturities inclutle other consumer, commercial — foreign and commercial real estate loans.
December 31, 2004
Due After
Due in 1 Year
1 Year Through Due After
or Less 5 Years 5 Years
$ 45,238 $ 50,037 $ 26,820
11,564 17,312 3,003
16,088 4,855 1,461
$ 72,890 $ 72,204--- - $ 31,284
41.4°� 40.9% 17.7%
$ 7,975 $ 12,672
64,229 18,612
$ 72,204 $ 31,284
Total
$122,095
31,879
22,404
$176,378
100.0%
BANK OF AMERICA 2004 87
�
�
•
•
Table IV Asset and Liability Management Interest Rate and Foreign Exchange Contracts
December 31, 2004
Average
Fair Expected Maturity _ ____ Estimated
(D011ars in miliions, average estimated duration in years) Value TOtal 2005 2006 2007 2008 2009 TheYeafter Duration
- - - ------------
Cash flow hedges
Receive fixed interest rate swaps�l� $(1,413) 4.16
Notional amount $122,274 $ -$ 2,927 $ 21,098 $ 44,223 $ 22,237 $ 31,789
Weighted average fixed rate 3.68% -% 3.46% 2.94% 3.47% 3.73°,6 4.43%
Pay fixed interest rate swaps�l� (2,248) 4.77
Notional amount $157,837 $ 39 $ 6,320 $ 62,584 $ 16,136 $ 10,289 $ 62,469
Weighted average fixed rate 4.24% 5.01% 3.54°k 3.58% 3.91°,6 3.85°� 5.13°k
Basis swaps (4)
Notional amount $ 6,700 $ 500 $ 4,400 $ - $ - $ - $ 1,800
Option products�z� 3,492
Notional amount�3� 323,835 145,200 90,000 17,500 58,404 - 12,731
Foreign exchange contracts 9
Notional amount 16 - - - 16 - -
Futures and forward rate contracts�^� 287
Notional amount�3� (10,889) 10,111 (21,000) - - - -
Total net cash flow positions $ 123
Fair value hedges
Receive fixed interest rate swaps�l� $ 534 5.14
Notional amount $ 45,050 $ 2,580 $ 4,363 $ 2,500 $ 2,694 $ 3,364 $ 29,549
Weighted average fixed rate 5.02% 4.78% 5.23% 4.53°k 3.47°k 4.44% 5.25°k
Foreign exchange contracts 2,739
Notional amount $ 13,590 $ 71 $ 1,529 $ 55 $ 1,571 $ 2,091 $ 8,273
� ---- Total net fair value positions $ 3273 - - ------------ ----- ---------
Closed interest rate contracts�s� 1,328
Total ALM contracts $ 4,724
(1) At December 31, 2004, $39.9 billion of the receive fixed interest rate swap notional and $75.9 billion of the pay fixetl interest swap notional represented forwartl starting swaps that will not be
effective until their respective contractual start tlates. At December 31, 2003, $14.2 billion of the receive fixetl interest rate swap notional and $114.5 billion of the pay fixed interest rate swap notional
represented forward starting swaps that will not be effective until their respective contractual start dates.
(2� Option protlucts include caps, floors, swaDtions antl exchange-traded options on index futures contracts. These strategies may include option collars or sprea0 strategies, which involve the buying and
selling of options on the same underlying security or interest rate index.
�3� Reflects the net of long and short positions.
(4) Futures and fonvartl rate contracts include Eurodollar futures, U.S. Treasury futures, and fonvard purchase and sale contracts. Included are $50.0 billion of fonvartl purchase contracts, and $25.6 billion
of fonvard sale contracts of mortgage-backed secunties and mortgage loans, at December 31, 2004, as tliscussed on page 76 and 77. At December 31, 2003, the fonvard purchase and sale contracts
of mortgage-backed securi[ies antl mortgage loans amounted to $69.8 billion antl $8.0 Dillion, respectively.
�5� Represents the unamortized net realized defened gains associatetl wit� closed contracts. As a result, no notional amount is reflected for expected maturity. The $1.3 billion antl $839 million deferred
gains as of December 31, 2004 antl 2003, respectively, on closetl interest ra[e contracts pnmanly consiste0 of gains on closed ALM swaps antl forward contracts. Of the $1.3 billion unamortized net
realizetl tleferred gains, a gain of $836 million vrds inclutletl in Accumulate0 OCI, a gain of $514 million was inclutletl as a basis adjustment of Long-term Debt, and a loss of $22 million was primarily
included as a basis adjustment to mortgage loans. AFS Secunties and Long-term Debt at December 31, 2004. As of December 31, 2003, a gain of $238 million was included in Accumulatetl OCI, a gain
of $631 million was primarily includeU as a basis adjustment of long-term debt. and a loss of $30 million was inclutletl as a basis adjustment to mortgage loans.
•
88 BANK OF AMERICA 2004
Table IV Asset and Liability Management Interest Rate and Foreign Exchange Contracts
December 31, 2003
(Dollars in millions, average estimated duration in years)
Cash flow hedges
Receive fixed interest rate swaps�11
Notional amount
Weighted average fixed rate
Pay fixed interest rate swaps�1�
Notional amount
Weighted average fixed rate
Basis swaps
Notional amount
Option products�zl
Notional amount�3�
Futures and forward rate contracts�4�
Notional amount�3�
Total net cash flow positions
Fair value hedges
Receive fixed interest rate swaps�1�
Notional amount
Weighted average fixed rate
Pay fixed interest rate swaps�1�
Notional amount
Weighted average fixed rate
Foreign exchange contracts
Notional amount
Futures and forward rate contracts�4�
Notional amount�3�
Total net fair value positions
Closed interest rate contractscs�
Total ALM contracts
See footnotes on page 88.
Average
Expected Maturity
Fair _ .____ ___ __ ________._.__.__-_-._.-- Estimated
Value Total 2004 2005 2006 2007 2008 Thereafter Duration
$ (2,184) 5.22
$122,547 $ - $ 2,000 $ - $33,848 $33,561 $53,138
3.46% -% 2.10% -% 3.08% 2.97% 4.06%
(2,101)
$134,654 $ - $ 3,641 $14,501 $39,142 $13,501 $63,869
4.00% -% 2.09% 2.92°� 3.33°� 3.77% 4.81%
38
$ 16,356 $ 9,000 $ 500 $ 4,400 $ 45 $ 590 $ 1,821
1,582
84,965 1,267 50,000 3,000 - 30,000 69S
1,911
106,760 86,760 20,000 - - - -
$ (754)
$ 980
$ 34,225 $ - $ 2,580 $ 4,363 $ 2,500 $ 2,638 $22,144
4.96°k -% 4.78% 5.22% 4.53% 3.46% 5.16%
(2)
$ 924 $ 81 $ 47 $ 80 $ 112 $ 149 $ 455
6.00°� 6.04°k 4.84% 4.54% 7.61% 4.77°h 6.38%
1,129
$ 7,364 $ 100 $ 488 $ 468 $ (379) $ 1,560 $ 5,127
(3)
(604) (604) - - - - -
$ 2,104
839 --- ----- -- -------------------
$ 2,189
5.51
6.12
3.70
•
�
•
BANK OF AMERICA 2004 89
u
��
•
Table V Non�xchange Traded Commodity Contracts
(D011ars In milllons)
Net fair value of contracts outstanding, January 1, 2004
Effects of legally enforceable master netting agreements
Gross fair value of contracts outstanding, January 1, 2004
Contracts realized or otherwise settled
Fair value of new contracts�l�
Other changes in fair value
Gross fair value of contracts outstanding, December 31, 2004
Effects of legally enforceable master netting agreements
Net fair value of contracts outstanding, December 31, 2004
(11 Includes the fair value of $0 of asset and $4 of liability positions of new contracts assumed in the Merger.
Table VI Non�xchange Traded Commodity Contract Maturities
(Dollars in millions)
Maturity of less than 1 year
Maturity of 1-3 years
Maturity of 4-5 years
Maturity in excess of 5 years
Gross fair value of contracts
Effects of legally enforceable master netting agreements
Net fair value of contracts outstanding
90 BANK OF AMERICA 2004
Asset
Positions
$ 1,724
3,344
5,068
(2,196)
2,129
1,643
6,644
(4,449)
$ 2,195
Liability
Positions
$ 1,473
3,344
4,817
(2,347)
1,991
1,440
5,901
(4,449)
$ 1,452
December 31, 2004
Asset LiabiNty
Positions Positlons
$ 1,741 $ 1,688
3,946 3,353
862 751
95 109
6,644 5,901
(4,449) (4,449)
$ 2,195 $ 1,452
Tabl@ VII Selected Quarterly Financial Data
(D011ars in millions,
except per share information)
Income statement
Net interest income
Noninterest income
Total revenue
Provision for credit losses
Gains on sales of debt securities
Noninterest expense
Income before income taxes
Income tax expense
Net income
Average common shares
issued and outstanding
(in thousands)
Average diluted common shares
issued and outstanding
(in thousands)
Performance ratios
Return on average assets
Return on average common
shareholders' equity
Total equity to total assets
(period end)
Total average equity to
total average assets
Dividend payout
Per common share data
Earnings
Diluted earnings
Dividends paid
Book value
Average balance sheet
Total loans and leases
Total assets
Total deposits
Long-term debt
Common shareholders' equity
Total shareholders' equity
Capital ratios (period end)
Risk-based capital:
Tier 1
Total
Leverage
Market price per
share of common stock
Closing
High closing
Low closing
2004 Quarters
Fourth Third Second
$ 7,750 $ 7,665 $ 7,581
5,964 4,922 5,481
13,714 12,587 13,062
706 650 789
101 732 795
7,334 7,021 7,242
5,775 5,648 5,826
1,926 1,884 1,977
3,849 3,764 3,849
First
$ 5,801
3, 730
9,531
624
495
5,430
3,972
1,291
2,681
Fourth
$ 5,586
4,049
9,635
583
139
5,288
3,903
1,177
2,726
2003 Quarters
Third Second
$ 5,304 $ 5,365
4,446 4,262
9,750 9,627
651 772
233 296
5,077 5,065
4,255 4,086
1,333 1,348
2,922 2,738
First
$ 5,209
3,693
8,902
833
273
4,725
3,617
1,193
2,424
4,032,979 4,052,304 4,062,384 2,880,306 2,926,494 2,980,206 2,988,187 2,998,811
4,106,040 4,121,375 4,131,290 2,933,402 2,978,962 3,039,282 3,046,612 3,052,576
1.33°� 1.37% 1.41% 1.29% 1.42% 1.50% 1.44% 1.40°�
15.63 15.56 16.63 22.16 22.42 23.74 21.86 19.92
8.97 9.14 9.35 6.10 6.67 6.98 6.75 7.51
8.51 8.79 8.52 5.84 6.32 6.34 6.62 7.06
47.45 48.75 42.60 43.21 42.70 40.85 35.06 39.64
$ 0.95 $ 0.93 $ 0.95 $ 0.93 $ 0.93 $ 0.98 $ 0.92 $ 0.81
0.94 0.91 0.93 0.91 0.92 0.96 0.90 0.79
0.45 0.45 0.40 0.40 0.40 0.40 0.32 0.32
24.56 24.14 23.51 16.85 16.63 16.92 17.03 16.69
$ 515,463 $ 503,078 $ 497,158 $ 374,077 $ 371,071 $ 357,288 $ 350,279 $ 345,662
1,152,551 1,096,683 1,094,459 833,192 764,186 771,255 759,906 699,926
609,936 587,878 582,305 425,075 418,840 414,569 405,307 385,760
99,588 98,361 96,395 78,852 70,596 66,788 68,927 67,399
97,828 96,120 92,943 48,632 48,238 48,816 50,212 49,343
98,100 96,392 93,266 48,686 48,293 48,871 50,269 49,400
8.10% 8.08% 8.20�0 7.73% 7.85% 8.25% 8.08% 8.20%
11.63 11.71 11.97 11.46 11.87 12.17 11.95 12.29
5.82 5.92 5.83 5.43 5.73 5.95 5.92 6.24
$ 46.99 $ 43.33 $ 42.31 $ 40.49 $ 40.22 $ 39.02 $ 39.52 $ 33.42
47.44 44.98 42.72 41.38 41.25 41.77 39.95 36.24
43.62 41.81 38.96 39.15 36.43 37.44 34.00 32.82
•
�
•
BANK OF AMERICA 2004 91
• Table VIII Quarterly Average Balances and Interest Rates - Fully Taxable-equivalent Basis
Fourth Quarter 2004 Third Quarter 2004
-------- -- ------------ -
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
�oouarsin m�mons� Balance Expense Rate Balance Expense Rate
Earning assets ---- --------- -
Time deposits placed and other short-term investments $ 15,620 $ 128 3.24% $ 14,726 $ 127 3.45%
Federal funds sold and securities
purchased under agreements to resell 149,226 712 1.90 128,339 484 1.50
Trading account assets 110,585 1,067 3.85 98,459 975 3.96
Securities 171,173 2,083 4.87 169,515 2,095 4.94
Loans and leases�1�:
Residential mortgage 178,879 2,459 5.49 175,046 2,371 5.41
Credit card 49,366 1,351 10.88 45,818 1,265 10.98
Home equity lines 48,336 609 5.01 44,309 514 4.62
Direct/Indirect consumer 39,526 551 5.55 38,951 538 5.49
Other consumerc2� _ 7,557 153 8.07 7,693 152 7.91
_ Total consumer 323,664 5,123 6.31 311,817 4,840 6.19
Commercial - domestic 121,412 1,917 6.28 122,093 1,855 6.04
Commercial real estate 31,355 392 4.98 30,792 344 4.44
Commercial lease financing 20,204 254 5.01 20,125 233 4.64
Commercial - foreign 18,828 272 5.76 18,251 245 5.34
Total commercial 191,799 2,835 5.88 191,261 2,677 5.57
Total loans and leases 515,463 7,958 6.15 503,078 7,517 5.95
Other earning assets 35,937 456 5.08 34,266 460 5.33
--------------------
- -----
Total earning assetsca� 998,004 12,404 4.96 948,383 11,658 4.90
Cash and cash equivalents 31,028 29,469
Other assets, less allowance for loan and lease losses 123,519 118,831
Total assets $1,152,551 $1,096,683
Interest-bearing liabilities
� Domestic interest-bearing deposits:
Savings $ 36,927 $ 36 0.39% $ 36,823 $ 35 0.38°�
NOW and money market deposit accounts 234,596 589 1.00 233,602 523 0.89
Consumer CDs and IRAs 109,243 711 2.59 101,250 668 2.63
Negotiable CDs, public funds and other time deposits 7,563 81 4.27 5,654 69 4.85
Total domestic interest-bearing deposits 388,329 1,417 1.45 377,329 1,295 1.37
Foreign interest-bearing deposits�4�:
Banks located in foreign countries 17,953 275 6.11 17,864 307 6.83
Governments and official institutions 5,843 33 2.21 5,021 22 1.80
Time, savings and other 30,459 104 1.36 29,513 87 1.17
Total foreign interest-bearing deposits 54,255 412 3.02 52,398 416 3.16
Total interest-bearing deposits 442,584 1,829 1.64 429,727 1,711 1.58
- - ------ - - ------ -- --...
Federal funds purchased, securities sold under agreements
to repurchase and other short-term borrowings 252,384 1,543 2.43 226,025 1,152 2.03
Trading account liabilities 37,387 352 3.74 37,706 333 3.51
Long-term debt 99,558 724 2.91 98,361 626 2.54
---- -------------- -----------
Total interest-bearing liabilities�3� 831,943 4,448 2.13 791,819 3,822 1.92
----------------------- ------ ---- -------------
Noninterest-bearing sources:
Noninterest-bearing deposits 167,352 158,151
Other liabilities 55,156 50,321
Shareholders' equity 98,100 96,392
Total IiabilRies and shareholders' equity $1,152,551 $1,096,683
Net interest spread 2.83 2.98
Impact of noninterest-bearing sources 0.35 0.32
- ------- -- -------- -------- ----- ---
Net interest income/yleld on earning assets $ 7,956 3.18% $ 7,836 3.30%
�11 Nonpertorming loans are inclutled in the respective average loan balances. Income on these nonpeRorming loans is recognized on a cas� basis.
�2� Inclutles consumer fnance of $3,473, $3,644, $3,828 and $3,999 in the fourth, t�ird. secontl antl firs[ quarters of 2004, antl $3.938 in the fourth quarter of 2003, respectively; foreign consumer of
$3,523, $3,304, $3,256 antl $1,989 in the fourth, third. secontl antl first quarters of 2004. antl E1,939 in the fourth quarte� of 2003, respectively; and consumer lease financing of $561, $745, $1,058
and $1,491 in t�e fourth, t�ird, secontl and frst quarters of 2004 and E1.860 in t�e fourth quarter of 2003, respec[ively.
l3) Interes[ income includes the impac[ of interest rate nsk management cont2cts. w�ic� increased interest income on Ihe untlerlying assets $496, $531, $658 and $715 in the fourth, third, second antl
first quarters of 2004 antl 5884 in the fourth quarter of 2003, respectively. These amounts were suDStantialy oNset by corresponding tlecreases in the income earned on the underlying assets. Interest
expense includes the impact of interest rate nsk management contracts, which increased in[erest ezpense on the unUedying liabilities $155, $217, $333 antl E183 in the fourth, third, seCOnd and first
quarters ot 2004 and 590 in t�e fourth quarter of 2003, respectively. These amounts were suDStantialy offset by corresponAing decreases in the in[erest paid on the underlying liabilities. for further
information on interest rate contracts, see 'In[erest Rate Risk Management" beginning on page 76.
• (4� Primanly consists of time dePOSits in denominations of 8100.000 or more.
92 BANK OF AMERICA 2004
Average
Balance
$ 14,384
124,383
104,391
159,797
173,158
43,160
40,424
39, 763
8,142
304,647
123,970
30,311
20,086
18,144
192,511
497,158
38,407
938,520
30,320
125,619
$1,094,459
$ 35,864
233,702
93,017
4,737
367,320
18,945
5, 739
29,882
54,566
421,886
235,701
31,620
96,395
785,602
160,419
55,172
93,266
$1,094,459
Second Quarter 2004
Interest
Income/
Expense
$ 59
413
1,025
1,925
2,284
1,167
450
540
169
4,610
1,843
317
237
237
2,634
7,244
494
11,160
$ 31
488
587
66
1,172
287
23
47
357
1,529
1,019
298
563
3,409
$ 7,751
Yield/
Rate
1.65%
1.33
3.94
4.82
5.29
10.88
4.48
5.44
8.32
6.07
5.98
4.20
4.72
5.24
5.50
5.85
5.17
4.77
0.34%
0.84
2.54
5.60
1.28
6.10
1.58
0.64
2.63
1.46
1.74
3.78
2.34
1.74
3.03
0.28
3.31°�
Averege
Balance
$ 12,268
113,761
105,033
99,755
141,898
35,303
24,379
34,045
7,479
243,104
90,946
19,815
9,459
10,753
130,973
374,077
29,914
734,808
23,187
75,197
$ 833,192
$ 26,159
155,835
75,341
5,939
263,274
18,954
4,701
21,054
44,709
307,983
195,866
34,543
78,852
617,244
117,092
50,170
48,686
$ 833,192
First Quarter 2004
Interest
Income/
6cpense
$ 48
434
1,025
1,223
1,960
870
262
464
120
3,676
1,511
210
95
95
1,911
5,587
404
8,721
$ 17
321
567
74
979
171
19
37
227
1,206
720
334
491
2, 751
$5,970
Yield/
Rate
1.57°h
1.53
3.91
4.91
5.53
9.92
4.31
5.49
6.42
6.07
6.68
4.26
4.00
3.57
5.87
6.00
5.42
4.76
0.27%
0.83
3.03
5.01
1.50
3.62
1.63
0.71
2.04
1.57
1.48
3.90
2.49
1.79
0.29
3.26%
Average
Balance
$ 11,231
96,713
94,630
59,197
142,482
32,734
23,206
33,422
7,737
239,581
90,309
19,616
9,971
11,594
131,490
371,071
33,938
666, 780
22,975
74,431
$ 764,186
$ 25,494
155,369
73,246
6,195
260,304
13,225
2,654
20,019
35,898
296,202
144,082
38,298
70,596
549,178
122,638
44,077
48,293
$ 764,186
Fourth Quarter 2003
Interest
Income/
Expense
$ 49
506
926
742
1,931
810
255
478
124
3,598
1,612
211
93
101
2,017
5,615
367
8,205
$ 19
400
476
44
939
177
11
51
239
1,178
515
317
450
2,460
$5,745
•
Yield/
Rate
1.71%
2.08
3.91
5.01
5.41
9.83
4.36
5.67
6.37
5.98
7.08
4.27
3.71
3.45
6.09
6.02
4.32
4.90
0.30% �
1.02
2.58
2.81
1.43
5.34
1.58
1.02
2.65
1.58
1.42
3.28
2.55
1.78
3.12
0.31
3.43 %
BANK OF AMERICA 2004 93
•
.
�
•
Report of Management on Internal Control Over Financial Reporting
Bank of America Corporation and Subsidiaries
The management of Bank of America Corporation is responsible
for establishing and maintaining adequate internal control over
financial reporting.
The Corporation's internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with accounting
principles generaily accepted in the United States of America. The
Corporation's internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the trans-
actions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with
accounting principles generally accepted in the United States of
America, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management
and directors of the company; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company's assets that could have a material
effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
94 BANK OF AMERICA 2004
Management assessed the effectiveness of the Corporation's
internal control over financial reporting as of December 31, 2004,
based on the framework set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control -
Integrated Framework. Based on that assessment, management
concluded that, as of December 31, 2004, the Corporation's internal
control over financial reporting is effective based on the criteria
established in In[ernal Control - Integrated Framework.
Management's assessment of the effectiveness of the
Corporation's internal control over financial reporting as of
December 31, 2004, has been audited by PricewaterhouseCoopers,
LLF an independent registered public accounting firm, as stated in
their report appearing on page 95, which expresses unqualified
opinions on management's assessment and on the effectiveness
of the Corporation's internal control over financial reporting as of
December 31, 2004.
�
� � �. �
Kenneth D. Lewis
Chairman, President and Chief Executive Officer
f��. � • j�y�,.�
Marc D. Oken
Chief Financial Officer
Report of Independent Registered Public Accounting Firm
Bank of America Corporation and Subsidiaries
To the Board of Directors and
Shareholders of Bank of America Corporation:
We have completed an integrated audit of Bank of America
Corporation's 2004 Consolidated Financial Statements and of its
internal control over financial reporting as of December 31, 2004 and
audits of its 2003 and 2002 Consolidated Financial Statements in
accordance with the standards of the Public Company Accounting
Oversight Board (United States). Our opinions, based on our audits,
are presented below.
Consolidated Financial Statements
In our opinion, the accompanying Consolidated Balance Sheets and the
related Consolidated Statements of Income, Consolidated Statements
of Changes in Shareholders' Equity and Consolidated Statements of
Cash Flows present fairly, in all material respects, the financial position
of Bank of America Corporation and its subsidiaries at December 31,
2004 and 2003, and the results of their operations and their cash
flows for each of the three years in the period ended December 31,
2004 in conformity with accounting principles generally accepted in
the United States of America. These Consolidated Financial Statements
are the responsibility of the Corporation's management. Our respon-
sibility is to express an opinion on these Consolidated Financial
Statements based on our audits. We conducted our audits of these
Consolidated Financial Statements in accordance with the standards
of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit of financial statements
inciudes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
Internal Control Over Financial Reporting
Also, in our opinion, management's assessment, included in the
Report of Management on Internal Control Over Financial Reporting
appearing on page 94 of the Annual Report, that the Corporation
maintained effective internal control over financial reporting as of
December 31, 2004 based on criteria established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), is fairly stated,
in all material respects, based on those criteria. Furthermore, in our
opinion, the Corporation maintained, in all material respects, effec-
tive internal control over financial reporting as of December 31,
2004, based on criteria established in Internal Control - Integrated
Framework issued by the COSO. The Corporation's management is
responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express
opinions on management's assessment and on the effectiveness of
the Corporation's internal control over financial reporting based on
our audit. We conducted our audit of internal control over financial
reporting in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether effective internal control over financial reporting
was maintained in all material respects. An audit of internal control
over financial reporting includes obtaining an understanding of internal
control over financial reporting, evaluating management's assessment,
testing and evaluating the design and operating effectiveness of
internal control, and performing such other procedures as we
consider necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinions.
A company's internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for exter-
nal purposes in accordance with generally accepted accounting princi-
ples. A company's internal control over fnancial reporting includes
those policies and procedures that (i) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of
management and directors ofthe company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have
a material effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
� �
�� � r ,� � �? L � _ 3 � ' �'
Charlotte, North Carolina
February 25, 2005
BANK OF AMERICA 2004 95
�
�
u
•
�
�
.
Consolidated Statement of Income
Bank of America Corporation and Subsidiaries
(Dollars in millions, except per share information)
Interest income
Interest and fees on loans and leases
Interest and dividends on securities
Federal funds sold and securities purchased under agreements to resell
Trading account assets
Other interest income
Total interest income
Interest expense
Deposits
Short-term borrowings
Trading account liabilities
Long-term debt
Totalinterest expense
Net interest income
Noninterest income
Service charges
Investment and brokerage services
Mortgage banking income
Investment banking income
Equity investment gains (losses)
Card income
Trading account profits
Other income
Total noninterest income
Year Ended December 31
---- ---------- --- ------ -----
2004 2003 2002
$28,216 $21,668 $22,030
7,265 3,068 3,941
2,043 1,373 870
4,016 3,947 3,757
1,687 1,507 1,456
43,227 ------ 31,563------- 32,054
6,275 4,908 5,434
4,434 1,871 1,982
1,317 1,286 1,260
2,404 2,034 2,455
14,430 10,099 11,131
28,797 21,464 20,923
6,989
3,627
414
1,886
861
4,588
869
863
20,097
5,618
2,371
1,922
1, 736
215
3,052
409
1,127
16,450
5,276
2,237
761
1,545
(280)
2,620
778
643
13,580
Total revenue 48,894 37,914 34,503
Provisfon for credit losses 2,769 2,839 3,697
Gains on sales of debt securities 2,123 941 63C
Noninterest expense
Personnel 13,473 10,446 9,682
Occupancy 2,379 2,006 1,780
Equipment 1,214 1,052 1,124
Marketing 1,349 985 753
Professional fees 836 844 525
Amortization of intangibles 664 217 218
Data processing 1,325 1,104 1,017
Telecommunications 730 571 481
Other general operating 4,439 2,930 2,865
Merger and restructuring charges 618 - -
---- ------ -------- ------------------------- -------------- __--
Total noninterest expense 27,027 20,155 18,445
Income before income taxes 21,221 15,861 12,991
Income tax expense 7,078 5,051 3,742
Net income $14,143 $10,810 $ 9,249
Net income available to common shareholders $14,127 $10,806 $ 9,244
Per common share information
Earnings $ 3.76 $ 3.63 $ 3.04
Diluted earnings $ 3.69 $ 3.57 $ 2.95
Dividends paid $ 1.70 $ 1.44 $ 1.22
Average common shares issued and outstanding (in thousands) 3,758,507 2,973,407 3,040,085
Average diluted common shares issued and outstanding (in thousands) 3,823,943 3,030,356 3,130,935
See accompanying No[es to Consolitlate0 Financial Statements.
96 BANK OF AMERICA 2004
Consolidated Balance Sheet
Bank of America Corporation and Subsidiaries
December 31
(D011a�s in millions) 2004 2003
Assets
Cash and cash equivalents $ 28,936 $ 27,084
Time deposits placed and other short-term investments 12,361 8,051
Federel funds sold and securities purchased under agreements to resell
(includes $91,243 and $76,446 pledged as collateral) 91,360 76,492
Trading account assets (includes $38,929 and $18,722 pledged as collateral) 93,587 68,547
Derivative assets 30,235 29,009
Securities:
Available-for-sale (includes $45,127 and $20,858 pledged as collateral) 194,743 66,382
Held-to-maturity, at cost (market value -$329 and $254) 330 247
Total securities 195,073 66,629
Loans and leases 521,837 371,463
Allowance for loan and lease losses (8,626) (6,163)
Loans and leases, net of allowance 513,211 365,300
Premises and equipment, net 7,517 6,036
Mortgage servicing rights 2,482 2,762
Goodwill 45,262 11,455
Core deposit intangibles and other intangibles 3,887 908
Other assets 86,546 57,210
Total assets $ 1,110,457 $ 719,483
Liabilities
Deposits in damestic offices:
Noninterest-bearing
Interest-bearing
Deposits in foreign offices:
Noninterest-bearing
Interest-bearing
Total deposits
Federal funds purchased and securities sold under agreements to repurchase
Trading account liabilities
Derivative liabilities
Commercial paper and other short-term borrowings
Accrued expenses and other liabilities
(includes $402 and $416 of reserve for unfunded lending commitments)
Long-term debt
Total Ilabilities
Commitments and contingencies (Notes 8 and 12)
Shareholders' equity
Preferred stock, $0.01 par value; authorized - 100,000,000 shares; issued and
outstanding -1,090,189 and 2,539,200 shares
Common stock and additional paid-in capital, $0.01 par value; authorized - 7,500,000,000 and
5,000,000,000 shares; issued and outstanding - 4,046,546,212 and 2,882,287,572 shares
Retained earnings
Accumulated other comprehensive income (loss)
Other
Total shareholders' equity
Total IIabIllties and shareholders' equlty
See accompanying Notes to Consolidated Financial Statements.
•
$ 163,833 $ 118,495 �
396,645 262,032
6,066 3,035
52,026 30,551
618,570 414,113
119,741 78,046
36,654 26,844
17,928 15,062
78,598 34,980
41,243 27,115
98,078 75,343
1,010,812 671,503
271 54
44,236 29
58,006 50,198
(2,587) (2,148)
(281) (153)
99,645 47,980
$ 1,110,457 $ 719,483
�
BANK OF AMERICA 2004 97
•
Consolidated Statement of Changes in Shareholders' Equity
Bank of America Corporation and Subsidiaries
Common Stock and Accumulated Total
Additional Other Share-
Preferred __ Pafd-In Capital Retalned Comprehensive holders' Comprehensive
(D011ars in millions, shares in thousands) Stock Shares Amount Earnings Income (Loss)�l� Other Equity Income
Balance, December 31, 2001 $ 65 3,118,594 $ 5,076 $42,980 $ 437 $(38) $48,520
Net income 9,249 9,249 $ 9,249
Net unrealized gains on available-for-sale debt
and marketable equity securities g74 g�q g7q
Net unrealized gains on foreign currency
translation adjustments 3 3 3
Net unrealized losses on derivatives (93) (93) (93;
Cash dividends paid:
Common (3,704) (3,704)
Preferred (5) (5)
Common stock issued under employee
plans and related tax benefits 100,008 2,611 21 2,632
Common stock repurchased (217,800) (7,466) (7,466)
Conversion of preferred stock (7) 530 7
Other 50 268 (3) (89) 33 209 (89;
Balance, December 31, 2002 58 3,001,382 496 48,517 1,232 16 50,319 10,044
Net income 10,810 10,810 10,810
Net unrealized losses on available-for-sale debt
and marketable equity securities (564) (564) (564;
Net unrealized gains on foreign currency
� translation adjustments 2 2 2
Net unrealized losses on derivatives (2,803) (2,803) (2,803)
Cash dividends paid:
Common (4,277) (4,277)
Preferred (4) (4)
Common stock issued under employee
plans and related tax benefits 139,298 4,372 (123) 4,249
Common stock repurchased (258,686) (4,936) (4,830) (9,766)
Conversion of preferred stock (4) 294 4
Other 93 (18) (15) (46) 14 (15)
-- ---- --- ------- ------ ------- --- ------------ -----
Balance, December 31, 2003 54 2,882,288 29 50,198 (2,148) (153) 47,980 7,430
Netincome 14,143 14,143 14,143
Net unrealized losses on available-for-sale debt
and marketable equity securities (126) (126) (126)
Net unrealized gains on toreign currency
translation adjustments 13 13 13
Net unrealized losses on derivatives (294) (294) (294
)
Cash dividends paid:
Common (6,452) (6,452)
Preferred (16) (16)
Common stock issued under employee
plans and related tax benefits 121,149 4,066 (127) 3,939
Stocks issued in acquisition�zl 271 1,186,728 46,480 46,751
Common stock repurchased (147,859) (6,375) 89 (6,286)
Conversion of preferred stock (54) 4,240 54
Other (18) 44 (32) (1) (7) (32)
- ---- ---- ------ ------ ------- ---- ---- __ _------
Balance, December 31, 2004 $271 4,046,546 $44,236 S 58,006 $(2,587) $(281) $ 99,645 $13,704
(l� At December 31, 2004, 2003 and 2002, Accumulatetl O[her Comprehensive Income (Loss) includes Net Unrealized Gains (Losses) on Availabl�for-sale (AFS) DeDt antl Marketable Equity Secunties of
$(196), $(70) antl $494, respectively; Net Unrealized Losses on Foreign Cuvency Trenslation Adjus(ments of $153, $166 and ES68, resD�tively; and Net Unrealized Gains (LOSSes) on Derivatives of
$(2,102), $(1,808) and $995, respectively.
�21 Includes atljustment for the fair value of ou[standing FleelBoston Financial Corporation (FleetBOSton) stock options of $862.
See accompanying Notes to Consolitlatetl Financial Statements.
•
98 BANK OF AMERICA 2004
Consolidated Statement of Cash Flows
Bank of America Corporation and Subsidiaries
(D011ars in millions)
Operating activities
Net income
Reconciliation of net income to net cash provided by (used in) operating activities:
Provision for credit losses
Gains on sales of debt securities
Depreciation and premises improvements amortization
Amortization of intangibles
Deferred income tax benefit
Net increase in trading and hedging instruments
Net (increase) decrease in other assets
Net increase (decrease) in accrued expenses and other liabilities
Other operating activities, net
Net cash provided by (used in) operating activities
Investing activities
Net increase in time deposits placed and other short-term investments
Net increase in federal funds sold and securities purchased under agreements to resell
Proceeds from sales of available-for-sale securities
Proceeds from maturities of available-for-sale securities
Purchases of available-for-sale securities
Proceeds from maturities of held-to-maturity securities
Proceeds from sales of loans and leases
Other changes in loans and leases, net
Originations and purchases of mortgage servicing rights
Net purchases of premises and equipment
Proceeds from sales offoreclosed properties
Investmentin unconsolidated subsidiary
Cash equivalents acquired net of purchase acquisitions
Other investing activities, net
Net cash used in investing activities
Financing activities
Net increase in deposits
Net increase in federal funds purchased and securities sold under agreements to repurchase
Net increase (decrease) in commercial paper and other short-term borrowings
Proceeds from issuance of long-term debt
Retirement of long-term debt
Proceeds from issuance of common stock
Common stock repurchased
Cash dividends paid
Other financing activities, net
Net cash provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31
Supplemental cash flow disclosures
Cash paid for interest
Cash paid for income taxes
Year Ended December 31
2004 2003 2002
$ 14,143 $ 10,810 $ 9,249
2,769
(2,123)
972
664
(402)
(13,180)
(11,928)
4,583
547
(3,955)
(1,147)
(3,880)
107,107
26,973
(232,609)
153
4,416
(32,344)
(1,075)
(863)
198
4,953
986
(127,132)
64,423
35,752
37,437
21,289
(16,904)
3,723
(6,286)
(6,468)
(91)
132,875
64
1,852
27,084
$ 28,936
$ 13,765
5,754
2,839
(941)
890
217
(263)
(13,153)
10,647
12,067
37
23,150
(1,238)
(31,614)
171, 711
26,953
(195,852)
779
32,672
(74,202)
(1,690)
(209)
247
(1,600)
(140)
898
(73,285)
27,655
12,967
13,917
16,963
(9,282)
3,970
(9,766)
(4,281)
(�2)
52,071
175
2,111
24,973
$ 27,084
$ 10,214
3,870
3,697
(630)
886
218
(444)
(13,133)
(2,345)
(11,019)
2,837
(10,684)
(881)
(16,770)
137,702
26,777
(145,962)
43
28,068
(37,184)
(900)
(939)
142
(110)
2,676
(7,338)
12,963
17,352
(790)
10,850
(15,364)
2,373
(7,466)
(3,709)
(66)
16,143
15
(1,864)
26,837
$ 24,973
$ 11,253
3,999
Assets antl liabilities of a certain multi-seller asset-backed commercial paper conduit that was consolidated amounted to $4,350 in 2003.
Net transfers of Loans and Leases from loans heldfor-sale (included in Other Assets) to the loan portfolio for Asset and Liability Management (ALM) purposes amounted to $1,106, $9,683 and $8,468 in
2004, 2003 and 2002, respectively.
The fair values of noncash assets acquired and liabilities assumed in the merger with FleetBOSton were $224,492 and $182,862, respectively.
Approximatety 1.2 billion shares of common stock, valued at approximately $45,622, were issued in connection with the merger with FleetBOSton.
See accomparrying Notes to Consolitlated Financial Statements.
BANK OF AMERICA 2004 99
•
�
•
•
u
•
Notes to Consolidated Financial Statements
Bank of America Corporation and Subsidiaries
Bank of America Corporation and its subsidiaries (the Corporation)
through its banking and nonbanking subsidiaries, provide a diverse
range of financial services and products throughout the United States
and in selected international markets. At December 31, 2004, the
Corporation operated its banking activities primarily under three
charters: Bank of America, National Association (Bank of America, N.A.),
Bank of America, N.A. (USA) and Fleet National Bank.
On April 1, 2004, the Corporation acquired all of the outstand-
ing stock of FleetBoston (the Merger). FleetBoston's results of oper-
ations were included in the Corporation's results beginning on April 1,
2004. The Merger was accounted for as a purchase. for informa-
tional and comparative purposes, certain tables have been expanded
to include a column entitled FleetBoston, April 1, 2004. This column
represents balances acquired from FleetBoston as of April 1, 2004,
including purchase accounting adjustments.
In order to more closely align with the scope of its businesses,
the Corporation has renamed each of its business segments.
Consumer and Small Business Banking has been renamed Global
Consumer and Small Business Banking, Commercial Banking is now
called Global Business and Financial Services, Global Corporate and
Investment Banking is now called Global Capital Markets and
Investment Banking and Wealth and Investmeni Management has
been renamed Global Wealth and Investment Management.
Note 1 Summary of Significant Accounting Principles
Principles of Consolidation and Basis of Presentation
The Consolidated Financial Statements include the accounts of the
Corporation and its majority-owned subsidiaries, and those variable
interest entities (VIEs) where the Corporation is the primary benefici-
ary. All significant intercompany accounts and transactions have been
eliminated. Results of operations of companies purchased are
included from the dates of acquisition. Certain prior period amounts
have been reciassified to conform to current period presentation.
Assets held in an agency or fiduciary capacity are not included in the
Consolidated Financial Statements. The Corporation accounts for
investments in companies in which it owns a voting interest of 20 per-
cent to 50 percent and for which it may have significant influence
over operating and financing decisions using the equity method of
accounting. These investments are included in Other Assets and the
Corporation's proportionate share of income or loss is included in
Other Income.
100 BANK OF AMERICA 2004
The preparation of the Consolidated Financial Statements in
conformity with accounting principles generally accepted in the
United States requires management to make estimates and
assumptions that affect reported amounts and disclosures. Actual
results could differ from those estimates and assumptions.
During the second quarter of 2004, the Corporation's Board of
Directors (the Board) approved a 2-for-1 stock split in the form of a
common stock dividend effective August 27, 2004, to common share-
holders of record on August 6, 2004. All prior period common share
and related per common share information has been restated to
reflect the 2-for-1 stock split.
Recently Issued Accounting Pronouncements
In January 2003, the Financial Accounting Standards Board (FASB)
issued FASB Interpretation No. 46, "Consolidation ofVariable Interest
Entities, an interpretation of ARB No. 51" (FIN 46), which provides a
framework for identifying VIEs and determining when a company
should include the assets, liabilities, noncontrolling interests and
results of activities of a VIE in its consolidated financial statements.
The Corporation adopted FIN 46 on July 1, 2003, and consolidated
approximately $12.2 billion of assets and liabilities related to certain
of our multi-seller asset-backed commercial paper (ABCP) conduits.
On October 8, 2003, one of these entities, Ranger Funding Company
(RFC) (formerly known as Receivables Capital Corporation), entered
into a Subordinated Note Purchase Agreement (the Note) with an
unrelated third party which reduced our exposure to this entity's
losses under liquidity and credit agreements as these agreements
are senior to the Note. This Note was issued in the principal amount
of $23 million, an original maturity of five years and pays interest at
23 percent. Proceeds from the issuance of the Note were deposited
into a separate account and may be used to cover losses incurred by
RFC. Upon RFC's issuance of this Note, the Corporation evaluated
whether the Corporation continued to be the primary beneficiary of
RFC and determined that the unrelated party which purchased the
Note absorbed over 50 percent of the expected losses of RFC. We
determined the amount of expected loss through mathematical analy-
sis utilizing a Monte Carlo model that incorporates the cash flows
from RFC's assets and utilizes independent loss information. The
noteholder is therefore the primary beneficiary of and is required to
consolidate the entity. As a result of the sale of the Note, we decon-
solidated approximately $8.0 billion of the previously consolidated
assets and liabilities of the entity. The impact of this transaction on
the Consolidated Statement of Income was the reduction in Interest
Income of approximately $1 million and the reclassification of approx-
imately $37 million from Net Interest Income to Noninterest Income
for 2003. At December 31, 2004, this entity had total assets of
$10.0 billion. There was no material impact to Net Income or Tier 1
Capital as a result of the adoption of FIN 46 or the subsequent
deconsolidation of this entity, and prior periods were not restated. In
December 2003, the FASB issued FASB Interpretation No. 46
(Revised December 2003), "Consolidation of Variable Interest
Entities, an interpretation of ARB No. 51" (FIN 46R), which is an
update of FIN 46. The Corporation adopted FIN 46R as of March 31,
2004. Adoption of this rule did not have a material impact on the
Corporation's results of operations or financial condition. For addi-
tional information on VIEs, see Note 8 of the Consolidated Financial
Statements.
On December 12, 2003, the American Institute of Certified
Public Accountants issued Statement of Position No. 03-3,
"Accounting for Certain Loans or Debt Securities Acquired in a
Transfer" (SOP 03-3). SOP 03-3 requires acquired impaired loans for
which it is probable that the investor will be unable to collect all
contractually required payments receivable to be recorded at the
present value of amounts expected to be received and prohibits
carrying over or creation of valuation allowances in the initial
accounting for these loans. SOP 03-3 is effective for loans acquired
in fiscal years beginning after December 31, 2004. SOP 03-3 is not
expected to have a material impact on the Corporation's results of
operations or financial condition.
On March 9, 2004, the Securities and Exchange Commission
(SEC) issued Staff Accounting Bulletin No. 105, "Application of
Accounting Principles to Loan Commitments" (SAB 105), which spec-
ifies that servicing assets embedded in commitments for loans to be
held-for-sale should be recognized only when the servicing asset has
been contractually separated from the associated loans by sale or
securitization. The adoption of SAB 105 is effective for commitments
entered into after March 31, 2004. The adoption of SAB 105 had no
material impact on the Corporation's results of operations or financial
condition.
On March 18, 2004, the Emerging Issues Task Force (EIT�
issued EITF 03-1, "The Meaning of Other-Than-Temporary Impairment
and Its Application to Certain Investments" (EITF 03-1). EITF 03-1
provides recognition and measurement guidance regarding when
impairments of equity and debt securities are considered other-than-
temporary thereby requiring a charge to earnings, and also requires
additional annual disclosures for investments in unrealized loss posi-
tions. The additional annual disclosure requirements were previously
issued by the EITF in November 2003 and were effective for the
Corporation for the year ended December 31, 2003. In September
2004, the FASB issued FASB Staff Position (FSP) EITF 03-1-1, which
delays the recognition and measurement provisions of EITF 03-1
pending the issuance of further implementation guidance. We are
currently evaluating the effect of the recognition and measurement
provisions of EITF 03-1.
In the third quarter of 2004, the Corporation adopted FSP No.
FAS 106-2, "Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of
2003" (FSP No. 106-2), which superseded FSP No. FAS 106-1. FSP
No. 106-2 provides authoritative guidance on accounting for the fed-
eral subsidy and other provisions of the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (the Medicare Act). The
effects of these provisions were recognized prospectively from July 1,
2004. A remeasurement on that date resulted in a reduction of $53
million in the Corporation's accumulated postretirement benefit obli-
gation. In addition, the Corporation's net periodic benefit cost for
other postretirement benefits has decreased by $15 million for 2004
as a result of the remeasurement.
On December 16, 2004, the FASB issued Statement of Financial
Accounting Standards (SFAS) No. 123 (revised 2004) "Share-based
Payment" (SFAS 123R) which eliminates the ability to account for
share-based compensation transactions using Accounting Principles
Board (APB) Opinion No. 25, "Accounting for Stock Issued to
Employees," (APB 25) and generally requires that such transactions
be accounted for using a fair value-based method with the resulting
compensation cost recognized over the period that the employee is
required to provide service in order to receive their compensation.
SFAS 123R also amends SFAS No. 95, "Statement of Cash Flows,"
requiring the benefits of tax deductions in excess of recognized com-
pensation cost to be reported as a financing cash flow, rather than
as an operating cash flow as currently required. The Corporation
plans to adopt SFAS 123R beginning July 1, 2005, using the modi-
fied-prospective method. The Corporation adopted the fair value-
based method of accounting for stock-based employee compensation
prospectively as of January 1, 2003, and as a result, adoption of
SFAS 123R is not expected to have a material impact on the
Corporation's results of operations or financial condition.
On December 21, 2004, the FASB issued FSP No. 109-2,
"Accounting and Disclosure Guidance for the Foreign Earnings
Repatriation Provision within the American Jobs Creation Act of
2004" (FSP No. 109-2). FSP No. 109-2 provides accounting and
disclosure guidance for the foreign earnings repatriation provision
within the American Jobs Creation Act of 2004 (the Act). The Act,
signed into law on October 22, 2004, provided U.S. companies with
the ability to elect to apply a special one-time tax deduction equal to
85 percent of certain earnings remitted from foreign subsidiaries,
provided certain criteria are met. Much of the detailed guidance
about how this special deduction will operate has yet to be issued
by the U.S. Department of the Treasury and the Internal Revenue
BANK OF AMERICA 2004 101
�
�
•
\ J
�
•
Service (IRS). Management is currently evaluating its opportunity to
make this election for 2005 and expects to complete its evaluation
after the release of detailed guidance, expected to occur by the third
quarter of 2005. In accordance with FSP No. 109-2, the special
deduction elective provision of the Act has not been considered in
determining the provision for deferred U.S. income taxes on unremit-
ted earnings of foreign subsidiaries. The range of unremitted earn-
ings that management is considering for the special deduction
election is $0 to $899 million, and the range of income tax effects
that could result from remitting earnings from certain foreign sub-
sidiaries that have been assumed to be permanently reinvested is
approximately $0 to $30 million.
Stock-based Compensation
SFAS No. 148, "Accounting for Stock-Based Compensation —
Transition and Disclosure — an amendment of FASB Statement
No. 123," (SFAS 148) was adopted prospectively by the Corporation
on January 1, 2003. SFAS 148 provides alternative methods of tran-
sition for a voluntary change to the fair value-based method of
accounting for stock-based employee compensation. All stock
options granted under plans before the adoption date will continue to
be accounted for under APB 25 unless these stock options are mod-
ified or settled subsequent to adoption. SFAS 148 was effective for
all stock option awards granted in 2003 and thereafter. Under APB
25, the Corporation accounted for stock options using the intrinsic
value method and no compensation expense was recognized, as the
grant price was equal to the strike price. Under the fair value method,
stock option compensation expense is measured on the date of grant
using an option-pricing model. The option-pricing model is based on
certain assumptions and changes to those assumptions may result
in different fair value estimates.
In accordance with SFAS 148, the Corporation provides disclo-
sures as if it had adopted the fair value-based method of ineasuring
all outstanding employee stock options during 2004, 2003 and 2002.
The following tabie presents the effect on Net Income and Earnings
Shareholder approved plans
Broad-based plans�l�
Shareholder approved plans
Broad-based plans�1�
111 There were no options granted under broad-based plans in 2004 or 2003.
n/a = not applicable
102 BANK OF AMERICA 2004
per Common Share had the fair value-based method been applied to
all outstanding and unvested awards for 2004, 2003 and 2002.
�ooua�s in miuions, Year Ended December 31
- ----------- ----- -- -----
except Der share data) 2004 2003 2002
— ---------- -----. _ ------
Net income (as reported) $ 14,143 $ 10,810 $ 9,249
Stock-based employee
compensation expense
recognized during the year,
net of related tax effects 161 78 -
Stock-based employee
compensation expense
determined under fair
value-based method,
net of related tax effectst1� (198) (225) (413)
Pro forma net Income $ 14,106 $10,663 $ 8,836
As reported
Earnings per common share $ 3.76 $ 3.63 $ 3.04
Diluted earnings per
common share 3.69 3.57 2.95
Pro forma
Earnings per common share 3.75 3.59 2.90
Diluted earnings per
common share 3.69 3.52 2.82
�l� Includes all awards granted, motlifietl or settled for which the fair value was requiretl to be
measured under SFAS 123, except restric[ed stock. Restricted stock expense, included in Net
Income foi 2004, 2003 antl 2002 was $288, $276 and $250, respectively.
In determining the pro forma disclosures in the previous table, the
fair value of options granted was estimated on the date of grant using
the Black-Scholes option-pricing model and assumptions appropriate
to each plan. The Black-Scholes model was developed to estimate
the fair value of traded options, which have different characteristics
than employee stock options, and changes to the subjective assump-
tions used in the model can result in materially different fair value
estimates. The weighted average grant date fair values of the options
granted during 2004, 2003 and 2002 were based on the assump-
tions below. See Note 16 of the Consolidated Financial Statements
for further discussion.
Risk-free Interest Rate
2004 2003 2002
3.36% 3.82% 5.00°k
n/a n/a 4.14
Expected Lives (Years)
2004 2003 2002
-- — -- ------
5 7 7
n/a n/a 4
Dividend Yield
2004 2003 2002
4.56% 4.40% 4.76%
n/a n/a 4.37
Volatility
2004 2003 2002
22.12% 26.57% 26.86°�
n/a n/a 31.02
Compensation expense under the fair value-based method is recog-
nized over the vesting period of the related stock options.
Accordingly, the pro forma results of applying SFAS 123 in 2004,
2003 and 2002 may not be indicative of future amounts.
Cash and Cash Equivalents
Cash on hand, cash items in the process of collection, and amounts
due from correspondent banks and the Federal Reserve Bank are
included in Cash and Cash Equivalents.
Securities Purchased under Agreements to Resell and
Securities Sold under Agreements to Repurchase
Securities Purchased under Agreements to Resell and Securities
Sold under Agreements to Repurchase are treated as collateralized
financing transactions and are recorded at the amounts at which the
securities were acquired or sold plus accrued interest. The
Corporation's policy is to obtain the use of Securities Purchased
under Agreements to Resell. The market value of the underlying secu-
rities, which collateralize the related receivable on agreements to
resell, is monitored, including accrued interest. The Corporation may
require counterparties to deposit additional collateral or return col-
lateral pledged, when appropriate.
Col lateral
The Corporation has accepted collateral that it is permitted by con-
tract or custom to sell or repledge. At December 31, 2004, the fair
value of this collateral was approximately $152.5 biliion of which
$117.5 billion was sold or repledged. At December 31, 2003, the fair
value of this collateral was approximately $86.9 billion of which
$62.8 billion was sold or repledged. The primary source of this col-
lateral is reverse repurchase agreements. The Corporation pledges
securities as collateral in transactions that consist of repurchase
agreements, public and trust deposits, Treasury tax and loan notes,
and other short-term borrowings. This collateral can be sold or
repledged by the counterparties to the transactions.
In addition, the Corporation obtains collateral in connection
with its derivative activities. Required collateral levels vary depend-
ing on the credit risk rating and the type of counterparty. Generally,
the Corporation accepts collateral in the form of cash, U.S. Treasury
securities and other marketable securities. Based on provisions con-
tained in legal netting agreements, the Corporation has netted cash
collateral against the applicable derivative mark-to-market expo-
sures. Accordingly, the Corporation offsets its obligation to return or
its right to reclaim cash collateral against the fair value of the deriv-
atives being collateralized.
•
Trading Instruments
Financial instruments utilized in trading activities are stated at fair
value. Fair value is generally based on quoted market prices. If quoted
market prices are not available, fair values are estimated based on
dealer quotes, pricing models or quoted prices for instruments with
similar characteristics. Realized and unrealized gains and losses are
recognized in Trading Account Profits.
Derivatives and Hedging Activities
All derivatives are recognized on the Consolidated Balance Sheet at
fair value, taking into consideration the effects of legally enforceable
master netting agreements that allow the Corporation to settle posi-
tive and negative positions and offset cash collateral held with the
same counterparty on a net basis. For exchange-traded contracts, fair
value is based on quoted market prices. For non-exchange traded con-
tracts, fair value is based on dealer quotes, pricing models or quoted
prices for instruments with similar characteristics. The Corporation
designates at inception whether the derivative contract is considered
hedging or non-hedging for SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133) accounting purposes.
Non-hedging derivatives held for trading purposes are included in the
Corporation's trading portfolio with changes in fair value reflected in
Trading Account Profits. Other non-hedging derivatives for accounting
purposes that are considered economic hedges are also included in
the trading portfolio with changes in fair value generally recorded in
Trading Account Profits. Most credit derivatives used by the
Corporation do not qualify for hedge accounting under SFAS 133 and
despite being effective economic hedges, changes in the fair value of
these derivatives are included in Trading Account Profts. Changes in
the fair value of derivatives that serve as economic hedges of MSRs
are recorded in Mortgage Banking Income.
For SFAS 133 hedges, the Corporation formally documents at
inception all relationships between hedging instruments and hedged
items, as well as its risk management objectives and strategies for
undertaking various accounting hedges. Additionally, the Corporation
uses dollar offset or regression analysis at the hedge's inception, and
quarterly thereafter, to assess whether the derivative used in its
hedging transaction is expected to be or has been highly effective in
offsetting changes in the fair value or cash flows of the hedged items.
The Corporation discontinues hedge accounting when it is deter-
mined that a derivative is not expected to be or has ceased to be
highly effective as a hedge, and then reflects changes in fair value in
earnings after termination of the hedge relationship.
The Corporation uses its derivatives designated as hedging for
accounting purposes as either fair value hedges, cash flow hedges or
hedges of net investments in foreign operations. The Corporation man-
ages interest rate and foreign currency exchange rate sensitivity pre-
dominantly through the use of derivatives. Fair value hedges are used
to limit the Corporation's exposure to total changes in the fair value of
its fixed interest-earning assets or interest-bearing liabilities that are
due to interest rate or foreign exchange volatility. Cash flow hedges
are used to minimize the variability in cash flows of interest-earning
BANK OF AMERICA 2004 103
�
•
•
�
•
assets or interest-bearing liabilities or forecasted transactions caused
by interest rate or foreign exchange fluctuation. Changes in the fair
value of derivatives designated for hedging activities that are highly
effective as hedges are recorded in earnings or Accumulated Other
Comprehensive Income (OCI), depending on whether the hedging rela-
tionship satisfies the criteria for a fair value or cash flow hedge,
respectively. Hedge ineffectiveness, and gains and losses on the
excluded component of a derivative in assessing hedge effectiveness
are recorded in earnings in the same income statement caption that
is used to record hedge effectiveness. SFAS 133 retains certain con-
cepts under SFAS No. 52, "Foreign Currency Translation;' (SFAS 52)
for foreign currency exchange hedging. Consistent with SFAS 52, the
Corporation records changes in the fair value of derivatives used as
hedges of the net investment in foreign operations as a component of
Accumulated OCI.
The Corporation, from time to time, purchases or issues finan-
cial instruments containing embedded derivatives. The embedded
derivative is separated from the host contract and carried at fair
value if the economic characteristics of the derivative are not clearly
and closely related to the economic characteristics of the host con-
tract. To the extent that the Corporation cannot reliably identify and
measure the embedded derivative, the entire contract is carried at
fair value on the Consolidated Balance Sheet with changes in fair
value reflected in earnings.
If a derivative instrument in a fair value hedge is terminated or
the hedge designation removed, the previous adjustments of the car-
rying amount of the hedged asset or liability are subsequently
accounted for in the same manner as other components of the car-
rying amount of that asset or liability. For interest-earning assets and
interest-bearing liabilities, such adjustments are amortized to earn-
ings over the remaining life of the respective asset or liability. If a
derivative instrument in a cash flow hedge is terminated or the hedge
designation is removed, related amounts in Accumulated OCI are
reclassified into earnings in the same period or periods during which
the hedged forecasted transaction affects earnings.
Interest Rate Lock Commitments
The Corporation enters into interest rate lock commitments (IRLCs)
in connection with its mortgage banking activities to fund residential
mortgage loans at specified times in the future. IRLCs that relate to
the origination of mortgage loans that will be held for sale are con-
sidered derivative instruments under Statement of Financial
Accounting Standards No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". As such, these IRLCs
are recognized at fair value with changes in fair value recorded in the
Consolidated Statement of Income.
Consistent with SAB 105, the Corporation does not record any
unrealized gain or loss at the inception of the loan commitment, which
is the time the commitment is issued to the borrower. The initial value
of the loan commitment derivative is based on the consideration
exchanged, if any, for entering into the commitment. In estimating the
subsequent fair value of an IRLC, the Corporation assigns a probability
to the loan commitment based on an expectation that it will be
104 BANK OF AMERICA 2004
exercised and the loan will be funded. This probability is commonly
referred to as the pull through assumption. The fair value of the
commitments is derived from the fair value of related mortgage loans,
which is based on a highly liquid, readily observable market. Changes
to the fair value of IRLCs are recognized based on interest rate
changes, changes in the probability that the commitment will be exer-
cised and the passage of time. Changes from the expected future
cash flows related to the customer relationship or loan servicing are
excluded from the valuation of the IRLCs.
Outstanding IRLCs expose the Corporation to the risk that the
price of the loans underlying the commitments might decline from
inception of the rate lock to funding of the loan due to increases in
mortgage interest rates. To protect against this risk, the Corporation
utilizes forward loan sales commitments and other derivatives
instruments, including options, to economically hedge the risk of
potential changes in the value of the loans that would result from
the commitments. The Corporation expects that the changes in the
fair value of these derivative instruments will offset changes in the
fair value of the IRLCs.
Securities
Debt securities are classified based on managemenYs intention on
the date of purchase and recorded on the Consolidated Balance Sheet
as Securities as of the trade date. Debt securities which management
has the intent and ability to hold to maturity are classified as held-to-
maturity and reported at amortized cost. Debt securities that are
bought and held principally for the purpose of resale in the near term
are classified as trading instruments and are stated at fair value with
unrealized gains and losses included in Trading Account Profits. All
other debt securities are classified as available-for-sale (AFS) and
carried at fair value with net unrealized gains and losses included in
Accumulated OCI on an after-tax basis.
Interest on debt securities, including amortization of premiums
and accretion of discounts, are included in Interest Income. Realized
gains and losses from the sales of debt securities, which are
included in Gains on Sales of Debt Securities, are determined using
the specific identification method.
Marketable equity securities are classified based on manage-
ment's intention on the date of purchase and recorded on the
Consolidated Balance Sheet as of the trade date. Marketable equity
securities that are bought and held principally for the purpose of
resale in the near term are classified as trading instruments and are
stated at fair value with unrealized gains and losses included in
Trading Account Profits. Other marketable equity securities are clas-
sified as AFS and either recorded as AFS Securities if they are a com-
ponent of the ALM portfolio, or othervvise recorded as Other Assets.
All AFS marketable equity securities are carried at fair value with net
unrealized gains and losses included in Shareholders' Equity on an
after-tax basis. Dividend income on AFS marketable equity securities
is included in Interest Income. Dividend income on marketable equity
securities recorded in Other Assets is included in Noninterest
Income. Realized gains and losses on the sale of all AFS marketable
equity securities, which are recorded in Equity Investment Gains, are
determined using the weighted average method.
Venture capital investments for which there are active market
quotes are carried at estimated fair value based on market prices
and recorded as Other Assets. Nonpublic and other venture capital
investments for which representative market quotes are not readily
available are initially valued at cost. Subsequently, these investments
are reviewed semi-annually and on a quarterly basis, where appropri-
ate, and adjusted to reflect changes in value as a result of initial pub-
lic offerings, market liquidity, the investees' financial results, sales
restrictions, or other than temporary declines in value. Gains and
losses on all venture capital investments, both unrealized and real-
ized, are recorded in Equity Investment Gains.
Loans and Leases
Loans are reported at their outstanding principal balances net of any
unearned income, charge-offs, unamortized deferred fees and costs
on originated loans, and premiums or discounts on purchased loans.
Loan origination fees and certain direct origination costs are deferred
and recognized as adjustments to income over the lives of the related
loans. Unearned income, discounts and premiums are amortized to
income using methods that approximate the interest method.
The Corporation provides equipment financing to its customers
through a variety of lease arrangements. Direct financing leases are
carried at the aggregate of lease payments receivable plus estimated
residual value of the leased property, less unearned income.
Leveraged leases, which are a form of financing lease, are carried net
of nonrecourse debt. Unearned income on leveraged and direct
financing leases is amortized over the lease terms by methods that
approximate the interest method.
Ailowance for Credit Losses
The allowance for credit losses which includes the Allowance for Loan
and Lease Losses, and the reserve for unfunded lending commit-
ments represents managemenYs estimate of probable losses inher-
ent in our lending activities. The Allowance for Loan and Lease
Losses represents our estimated probable credit losses in our
funded consumer, and commercial loans and leases while our
reserve for unfunded lending commitments, including standby letters
of credit and binding unfunded loan commitments, represents esti-
mated probable credit losses in these off-balance sheet credit instru-
ments based on utilization assumptions. Credit exposures, excluding
Derivative Assets and Trading Account Assets, deemed to be uncol-
lectible are charged against these accounts. Cash recovered on pre-
viously charged off amounts are credited to these accounts.
The Corporation perForms periodic and systematic detailed
reviews of its lending portfolios to identify credit risks and to assess
the overall coliectibility of those portfolios. The allowance on certain
homogeneous loan portfolios, which generally consist of consumer
loans, is based on aggregated portfolio segment evaluations gener-
ally by product type. Loss forecast models are utilized for these seg-
ments which consider a variety of factors including, but not limited
to, historical loss experience, estimated defaults or foreclosures
based on portfolio trends, delinquencies, economic conditions and
credit scores. These consumer loss forecast models are updated on
a quarterly basis in order to incorporate information reflective of the
current economic environment. The remaining commercial portfolios
are reviewed on an individual loan basis. Loans subject to individual
reviews are analyzed and segregated by risk according to the
Corporation's internal risk rating scale. These risk classifications, in
conjunction with an analysis of historical loss experience, current eco-
nomic conditions and performance trends within specific portfolio seg-
ments, and any other pertinent information (including individual
valuations on nonperforming loans in accordance with SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan," (SFAS 114)) result
in the estimation of the allowance for credit losses. The historical loss
experience is updated quarterly to incorporate the most recent data
reflective of the current economic environment.
If necessary, a specific Allowance for Loan and Lease Losses is
established for individual impaired commercial loans. A loan is con-
sidered impaired when, based on current information and events, it
is probable that the Corporation will be unable to collect all amounts
due, including principal and interest, according to the contractual
terms of the agreement. Once a loan has been identified as individ-
ually impaired, management measures impairment in accordance
with SFAS 114. Individually impaired loans are measured based on
the present value of payments expected to be received, observable
market prices, or for loans that are solely dependent on the collateral
for repayment, the estimated fair value of the collateral. If the
recorded investment in impaired loans exceeds the present value of
payments expected to be received, a specific allowance is estab-
lished as a component of the Allowance for Loan and Lease Losses.
Three components of the Allowance for Loan and Lease Losses
are allocated to cover the estimated probable losses in each loan
and lease category based on the results of the Corporation's detailed
review process described above. The first component covers those
commercial loans that are either nonperforming or impaired. The sec-
ond component of the allocated allowance covers consumer loans
and leases, and performing commercial loans and leases. The third
or general component of the Allowance for Loan and Lease Losses,
determined separately from the procedures outlined above, is main-
tained to cover uncertainties that affect our estimate of probable
losses. These uncertainties include the imprecision inherent in the
forecasting methodologies, as well as domestic and global economic
uncertainty and large single name defaults or event risk.
Management assesses each of these components to determine the
overall level of the third component. The relationship of the general
component to the total Allowance for Loan and Lease Losses may
fluctuate from period to period. Management evaluates the adequacy
of the Allowance for Loan and Lease Losses based on the combined
total of these three components.
In addition to the Allowance for Loan and Lease Losses, the
Corporation also estimates probable losses related to unfunded
lending commitments, such as letters of credit and financial guar-
antees, and binding unfunded loan commitments. Unfunded lending
commitments are subject to individual reviews and are analyzed
and segregated by risk according to the Corporation's internal risk rat-
BANK OF AMERICA 2004 105
•
� �
�
•
�
f 1
u
•
ing scale. These risk classifications, in conjunction with an analysis
of historical loss experience, current economic conditions, perForm-
ance trends within specific portfolio segments and any other perti-
nent information, result in the estimation of the reserve for unfunded
lending commitments.
The allowance for credit losses related to the loan and lease
portfolio, and the reserve for unfunded lending commitments are
reported on the Consolidated Balance Sheet in the Allowance for
Loan and Lease Losses, and Accrued Expenses and Other Liabilities,
respectively. Provision for Credit Losses related to the loans and
leases portfolio, and unfunded lending commitments are both
reported in the Consolidated Statement of Income in the Provision for
Credit Losses.
Nonperforming Loans and Leases
Credit card loans are charged off at 180 days past due or 60 days
from notification of bankruptcy filing and are not classified as non-
performing. Unsecured consumer loans and deficiencies in non-real
estate secured loans and leases are charged off at 120 days past
due and not classified as nonperforming. Real estate secured con-
sumer loans are placed on nonaccrual status and classified as non-
perForming at 90 days past due. The amount deemed uncollectible on
reat estate secured loans is charged off at 180 days past due.
Consumer loans are generally returned to performing status when
principal or interest is less than 90 days past due.
Commercial loans and leases that are past due 90 days or more
as to principal or interest, or where reasonable doubt exists as to
timely collection, including loans that are individually identified as
being impaired, are generally classified as nonperforming unless well-
secured and in the process of collection. Loans whose contractual
terms have been restructured in a manner which grants a concession
to a borrower experiencing financial difficulties, without compensa-
tion on restructured loans, are classified as nonperforming until the
loan is performing for an adequate period of time under the restruc-
tured agreement. In situations where the Corporation does not
receive adequate compensation, the restructuring is considered a
troubled debt restructuring. Interest accrued but not collected is
reversed when a commercial loan is classified as nonperforming.
Interest collections on commercial nonperforming loans and leases
for which the ultimate collectibility of principal is uncertain are
applied as principal reductions; otherwise, such collections are cred-
ited to income when received. Commercial loans and leases may be
restored to performing status when all principal and interest is cur-
rent and full repayment of the remaining contractual principal and
interest is expected, or when the loan otherwise becomes well-
secured and is in the process of collection.
Loans Held-for-Sale
Loans held-for-sale include residential mortgages, loan syndications,
and to a lesser degree, commercial real estate, consumer finance
and other loans, and are carried at the lower of aggregate cost or
market value. Loans held-for-sale are included in Other Assets.
106 BANK OF AMERICA 2004
Premises and Equipment
Premises and Equipment are stated at cost less accumulated depre-
ciation and amortization. Depreciation and amortization are recog-
nized using the straight-line method over the estimated useful lives
of the assets. Estimated lives range up to 40 years for buildings, up
to 12 years for furniture and equipment, and the shorter of lease
term or estimated useful life for leasehold improvements.
Mortgage Servicing Rights
Pursuant to agreements between the Corporation and its counterpar-
ties, $2.2 billion of Excess Spread Certificates (the Certificates) were
converted into Mortgage Servicing Rights (MSRs) on June 1, 2004.
Prior to the conversion of the Certificates into MSRs, the Certificates
were accounted for on a mark-to-market basis (i.e. fair value) and
changes in the value were recognized as Trading Account Profits. On
the date of the conversion, the Corporation recorded these MSRs at
the Certificates' fair market value, and that value became their new
cost basis. Subsequent to the conversion, the Corporation accounts
for the MSRs at the lower of cost or market with impairment recog-
nized as a reduction of Mortgage Banking Income. Except for Note 8
of the Consolidated Financial Statements, what are now referred to
as MSRs include the Certificates for periods prior to the conversion.
During the second quarter of 2004, the Corporation entered
into discussions with the Securities and Exchange Commission Staff
(the Staf� regarding the accounting treatment for the Certificates and
MSRs. The Corporation has concluded its discussions with the Staff
regarding the prior accounting for the Certificates. Following discus-
sions with the Staff, the conclusion was reached that the Certificates
lacked sufficient separation from the MSRs to be accounted for as
described above (i.e. fair value). Accordingly, the Corporation should
have continued to account for the Certificates as MSRs (i.e. lower
of cost or market). The effect on our previously filed Consolidated
Financial Statements of following lower of cost or market accounting
for the Certificates compared to fair value accounting (i.e. the prior
accounting) is not material. Consequently, no revisions were made to
previously filed Consolidated Financial Statements.
When applying SFAS 133 hedge accounting for derivative finan-
cial instruments that have been designated to hedge MSRs, loans
underlying the MSRs being hedged are stratified into pools that pos-
sess similar interest rate and prepayment risk exposures. The
Corporation has designated the hedged risk as the change in the
overall fair value of these stratified pools within a daily hedge period.
The Corporation performs both prospective and retrospective hedge
effectiveness evaluations, using regression analyses. A prospective
test is performed to determine whether the hedge is expected to be
highly effective at the inception of the hedge. A retrospective test is
performed at the end of the hedge period to determine whether the
hedge was actually effective during the hedge period.
Other derivatives are used as economic hedges of the MSRs,
but are not designated as hedges under Sfi4S 133. These derivatives
are marked to market and recognized through Mortgage Banking
Income. Securities are also used as economic hedges of MSRs, but
do not qualify as hedges under SFAS 133 and, therefore, are
accounted for as AFS Securities with realized gains recorded in Gains
on Sales of Debt Securities and unrealized gains or losses recorded
in Accumulated OCI.
Goodwill and Other Intangibles
Net assets of companies acquired in purchase transactions are
recorded at fair value at the date of acquisition, as such, the histori-
cal cost basis of individual assets and liabilities are adjusted to
reflect their fair value. Identified intangibles are amortized on an
accelerated or straight-line basis over the period benefited. Goodwill
is not amortized but is reviewed for potential impairment on an
annual basis, or if events or circumstances indicate a potential
impairment, at the reporting unit level. The impairment test is per-
formed in two phases. The first step of the Goodwill impairment test
compares the fair value of the reporting unit with its carrying amount,
including Goodwill. If the fair value of the reporting unit exceeds its
carrying amount, Goodwill of the reporting unit is considered not
impaired; however, if the carrying amount of the reporting unit
exceeds its fair value, an additional procedure must be performed.
That additional procedure compares the implied fair value of the
reporting unit's Goodwill (as defined in SFAS No. 142, "Goodwill and
Other Intangible Assets" (SFAS 142)) with the carrying amount of that
Goodwill. An impairment loss is recorded to the extent that the car-
rying amount of Goodwill exceeds its implied fair value. In 2004,
2003 and 2002, Goodwill was tested for impairment and no impair-
ment charges were recorded.
Other intangible assets subject to amortization are evaluated
for impairment in accordance with SFAS No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets" (SFAS 144). An impair-
ment loss will be recognized if the carrying amount of the intangible
asset is not recoverable and exceeds fair value. The carrying amount
of the intangible is considered not recoverable if it exceeds the sum
of the undiscounted cash flows expected to result from the use of the
asset. At December 31, 2004, intangible assets included on the
Consolidated Balance Sheet consist of core deposit intangibles,
purchased credit card relationship intangibles and other customer-
related intangibles that are amortized on an accelerated basis using
an estimated range of anticipated lives of 6 to 10 years.
Special Purpose Financing Entities
In the ordinary course of business, the Corporation supports its cus-
tomers' financing needs by facititating the customers' access to dif-
ferent funding sources, assets and risks. In addition, the Corporation
utilizes certain financing arrangements to meet its balance sheet man-
agement, funding, liquidity, and market or credit risk management
needs. These financing entities may be in the form of corporations,
partnerships, limited liability companies or trusts, and are generally
not consolidated on the Corporation's Consolidated Balance Sheet.
The majority of these activities are basic term or revolving securitiza-
tion vehicles for mortgages or other types of loans which are generally
funded through term-amortizing debt structures. Other special pur-
pose entities finance their activities by issuing short-term commercial
•
paper. Both types of vehicles are designed to be paid off from the
underlying cash flows of the assets held in the vehicle.
Securitizations
The Corporation securitizes, sells and services interests in residential
mortgage loans, and from time to time, consumer flnance, commercial
and credit card loans. The accounting for these activities are governed
by SFAS 140, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities — a replacement of FASB
Statement No. 125" (SFAS 140). The securitization vehicles are
Qualified Special Purpose Entities (QSPEs) which, in accordance with
SFAS 140, are legally isolated, bankruptcy remote and beyond the con-
trol of the seller. QSPEs are not included in the consolidated financial
statements of the seller. When the Corporation securitizes assets, it
may retain interest-only strips, one or more subordinated tranches and,
in some cases, a cash reserve account which are generally considered
residual interests in the securitized assets. The Corporation may also
retain senior tranches in these securitizations. Gains and losses upon
sale of the assets depend, in part, on the Corporation's allocation of
the previous carrying amount of the assets to the retained interests.
Previous carrying amounts are allocated in proportion to the relative fair
values of the assets sold and interests retained.
Quoted market prices are used to obtain fair values of senior
retained interests. Generally, quoted market prices for retained resid-
ual interests are not available; therefore, the Corporation estimates
fair values based upon the present value of the associated expected
future cash flows. This may require management to estimate credit
losses, prepayment speeds, forward yield curves, discount rates and
other factors that impact the value of retained interests. See Note 8
of the Consolidated Financial Statements for further discussion.
The excess cash flows expected to be received over the amor-
tized cost of the retained interest is recognized as Interest Income
using the effective yield method. If the fair value of the retained inter-
est has declined below its carrying amount and there has been an
adverse change in estimated contractual cash flows of the underlying
assets, then such decline is determined to be other-than-temporary
and the retained interest is written down to fair value with a corre-
sponding adjustment to earnings.
Other Special Purpose Financing Entities
Other special purpose financing entities are generally funded with
short-term commercial paper. These financing entities are usually
contractually limited to a narrow range of activities that facilitate the
transfer of or access to various types of assets or financial instru-
ments and provide the investors in the transaction protection from
creditors of the Corporation in the event of bankruptcy or receivership
of the Corporation. In certain situations, the Corporation provides liq-
uidity commitments and/or loss protection agreements.
The Corporation determines whether these entities should be
consolidated by evaluating the degree to which it maintains control
over the financing entity and will receive the risks and rewards of the
assets in the financing entity. In making this determination, the
Corporation considers whether the entity is a QSPE, which is generally
BANK OF AMERICA 2004 107
•
•
•
u
•
not required to be consolidated by the seller or investors in the entity.
For non-QSPE structures or VIEs, the Corporation assesses whether it
is the primary beneficiary of the entity. In accordance with FIN 46R, the
primary beneficiary is the party that consolidates a VIE based on its
assessment that it will absorb a majority of the expected losses or
expected residual returns of the entity, or both. For additional infor-
mation on other special purpose financing entities, see Note 8 of the
Consolidated Financial Statements.
Income Taxes
The Corporation accounts for income taxes in accordance with SFAS
No. 109, "Accounting for Income Taxes" (SFAS 109), resulting in two
components of Income Tax Expense: current and deferred. Current
income tax expense approximates taxes to be paid or refunded for
the current period. Deferred income tax expense results from
changes in deferred tax assets and liabilities between periods. These
gross deferred tax assets and liabilities represent decreases or
increases in taxes expected to be paid in the future because of future
reversals of temporary differences in the bases of assets and liabili-
ties as measured by tax laws and their bases as reported in the finan-
cial statements.
Deferred tax assets have also been recognized for net operating
loss carryforwards and tax credit carryforwards. Valuation allowances
are then recorded to reduce deferred tax assets to the amounts man-
agement concludes are more likely than not to be realized.
Retirement Benefits
The Corporation has established qualified retirement plans covering
substantially all full-time and certain part-time employees. Pension
expense under these plans is charged to current operations and con-
sists of several components of net pension cost based on various
actuarial assumptions regarding future experience under the plans.
In addition, the Corporation has established unfunded supple-
mental benefit plans and supplemental executive retirement plans for
selected officers of the Corporation and its subsidiaries that provide
benefits that cannot be paid from a qualified retirement plan due to
Internal Revenue Code restrictions. These plans are nonqualified
under the Internal Revenue Code and assets used to fund benefit
payments are not segregated from other assets of the Corporation;
therefore, in general, a participant's or beneficiary's claim to benefits
under these plans is as a general creditor.
In addition, the Corporation has established several postretire-
ment healthcare and life insurance benefit plans.
Other Comprehensive Income
The Corporation records unrealized gains and losses on AFS
Securities, foreign currency translation adjustments, related hedges
of net investments in foreign operations, and gains and losses on
cash flow hedges in Accumulated OCI. Gains and losses on AFS
Securities are reclassified to Net Income as the gains or losses are
108 BANK OF AMERICA 2004
realized upon sale of the securities. Other-than-temporary impairment
charges are reclassified to Net Income at the time of the charge.
Translation gains or losses on foreign currency translation adjust-
ments are reclassified to Net Income upon the sale or liquidation of
investments in foreign operations. Gains or losses on derivatives
accounted for as hedges are reclassified to Net Income in the same
caption of the Consolidated Statement of Income that was affected
by the hedged item.
Earnings Per Common Share
Earnings per Common Share is computed by dividing Net Income
Available to Common Shareholders by the weighted average common
shares issued and outstanding. For Diluted Earnings per Common
Share, Net Income Available to Common Shareholders can be
affected by the conversion of the registrant's convertible preferred
stock. Where the effect of this conversion would have been dilutive,
Net Income Available to Common Shareholders is adjusted by the
associated preferred dividends. This adjusted Net Income is divided
by the weighted average number of common shares issued and out-
standing for each period plus amounts representing the dilutive
effect of stock options outstanding, restricted stock units and the
dilution resulting from the conversion of the registrant's convertible
preferred stock, if applicable. The effects of convertible preferred
stock, restricted stock units and stock options are excluded from the
computation of diluted earnings per common share in periods in
which the effect would be antidilutive. Dilutive potential common
shares are calculated using the treasury stock method.
Foreign Currency Translation
Assets, liabilities and operations of foreign branches and sub-
sidiaries are recorded based on the functional currency of each
entity. For certain of the foreign operations, the functional currency
is the local currency, in which case the assets, liabilities and opera-
tions are translated, for consolidation purposes, at current exchange
rates from the local currency to the reporting currency, the U.S.
dollar. The resulting unrealized gains or losses are reported as a
component of Accumulated OCI on an after-tax basis. When the for-
eign entity is not a free-standing operation or is in a hyperinflation-
ary economy, the functional currency used to measure the financial
statements of a foreign entity is the U.S. dollar. In these instances,
the resulting realized gains or losses are included in income.
Co-Branding Credit Card Arrangements
The Corporation has co-brand arrangements that entitle a cardholder
to receive benefits based on purchases made with the card. These
arrangements have remaining terms generally not exceeding five
years. The Corporation may pay one-time fees which would be
deferred ratably over the term of the arrangement. The Corporation
makes monthly payments to the co-brand partners based on the vol-
ume of cardholders' purchases and on the number of points awarded
to cardholders. Such payments are expensed as incurred and are
recorded as contra-revenue.
Note 2 Merger and Restructuring Activity
FleetBoston
Pursuant to the Agreement and Plan of Merger, dated October 27,
2003, by and between the Corporation and FleetBoston (the Merger
Agreement), the Corporation acquired 100 percent of the outstanding
stock of FleetBoston on Apri� 1, 2004, in a tax-free merger, in order
to expand the Corporation's presence in the Northeast. FleetBoston's
results of operations were included in the Corporation's results begin-
ning April 1, 2004.
As provided by the Merger Agreement, approximately 1.069 bil-
lion shares of FleetBoston common stock were exchanged for approx-
imately 1.187 billion shares of the Corporation's common stock, as
adjusted for the stock split. At the date of the Merger, this represented
approximately 29 percent of the Corporation's outstanding common
stock. FleetBoston shareholders also received cash of $4 million in
(D011ars in millions)
Purchase price
FleetBoston common stock exchanged (in thousands)
Exchange ratio (as adjusted for the stock split)
Total shares of the Corporation's common stock exchanged (in thousands)
Purchase price per share of the Corporation's common stock�1�
Total value of the Corporation's common stock exchanged
FleetBoston preferred stock converted to the Corporation's preferred stock
Fair value of outstanding stock options, direct acquisition costs and
the effect of FleetBoston shares already owned by the Corporation
Total purchase price
Allocation of the purchase price
FleetBoston stockholders' equity
FleetBoston goodwill and other intangible assets
Adjustments to reflect assets acquired and liabilities assumed at fair value:
Securities
Loans and leases
Premises and equipment
Identified intangibles
Other assets and deferred income tax
Deposits
Other liabilities
Exit and termination liabilities
Long-term debt
Fair value of net assets acquired
C�
lieu of any fractional shares of the Corporation's common stock that
would have otherwise been issued on April 1, 2004. Holders of
FleetBoston preferred stock received 1.1 million shares of the
Corporation's preferred stock. The Corporation's preferred stock that
was exchanged was valued using the book value of FleetBoston pre-
ferred stock. The depositary shares underlying the FleetBoston pre-
ferred stock, each representing a one-fifth interest in the FleetBoston
preferred stock prior to the Merger, now represent a one-fifth interest
in a share of the Corporation's preferred stock. The purchase price
was adjusted to reflect the effect of the 15.7 million shares of
FleetBoston common stock that the Corporation already owned.
The Merger was accounted for under the purchase method of
accounting in accordance with SFAS No. 141, "Business
Combinations" (SFAS 141). Accordingly, the purchase price was allo-
cated to the assets acquired and the liabilities assumed based on
their estimated fair values at the Merger date as summarized below.
1,068,635
1.1106
1,186,826--- —
$ 38.44
$ 45,622
271
1,360 •
$ 47,253
$ 19,329
(4,709)
($4)
(770)
(738)
3,243
243
(313)
(286)
(658)
(1,182)
14,075
Estimated goodwlll resulting from the Merger $ 33,17s
(11 The value of the shares of common stock exchanged with FleetBOSton shareholders was based upon the average of the closing pnces of the Corporation's common stock for the penotl commencing hvo
trading tlays before, and ending lwo trading days after, October 27, 2003, the date of the Merger Agreement, as adjustetl for the stock split.
•
BANK OF AMERICA 2004 109
•
�
�
Merger and Restructuring Charges
Merger and Restructuring Charges are recorded in the Consolidated
Statement of Income, and include incremental costs to integrate
Bank of America's and FleetBoston's operations. These charges rep-
resent costs associated with merger activities and do not represent
on-going costs of the fully integrated combined organization. Systems
integrations and related charges, and other, as shown in the table
below, are expensed as incurred.
In addition, Merger and Restructuring Charges include costs
related to an infrastructure initiative undertaken in the third quarter
of 2004 to simplify the Corporation's business model. In 2004, man-
agement engaged in a thorough review of major business units and
supporting functions to ensure the Corporation is operating in a cost
efficient manner. As a result of this review and additional opportuni-
ties the Corporation has identified to operate more efficiently through
the Merger, the Corporation announced that it will reduce its work-
force by approximately 2.5 percent, or 4,500 positions resulting in
total severance costs of $149 million. Included in Merger and
Restructuring Charges are $102 million incurred for this initiative. An
additional $47 million of severance liabilities were recorded related
to this initiative for legacy FleetBoston associates resulting in an
increase in Goodwill. See analysis of exit costs and restructuring
reserves below. The Corporation expects to incur additional sever-
ance costs related to this initiative of less than $5 million in 2005.
(DOliars in millions) 2004
Severance and employee-related charges:
Merger-related $138
Infrastructure initiative 102
Systems integrations and related charges 249
Other 12g
Total merger and restructuring charges $ 618
Exit Costs and Restructuring Reserves
On April 1, 2004, $680 million of liabilities for FleetBoston's exit and
termination costs as a result of the Merger were recorded as pur-
chase accounting adjustments resulting in an increase in Goodwill.
Included in the $680 million were $507 million for severance, relo-
cation and other employee-related costs, $168 million for contract
terminations, and $5 million for other charges. As previously men-
tioned, during 2004, $47 million of additional liabilities was recorded
related to severance costs for legacy FleetBoston associates in
connection with the infrastructure initiative. In addition, during 2004,
reductions in the exit costs reserve were recorded, due to revised
estimates of $50 million for contract terminations and $19 million for
severance costs. During 2004, cash payments of $276 million have
been charged against this liability including $244 million of sever-
ance, relocation and other employee-related costs, and $32 million of
contract terminations.
110 BANK OF AMERICA 2004
Restructuring charges through December 31, 2004 include the
establishment of a reserve for legacy Bank of America associate sev-
erance and other employee-related charges of $240 million. Of this
amount, $102 million was related to the infrastructure initiative.
During 2004, cash payments of $74 million have been charged
against this reserve.
Payments under these reserves are expected to be substantially
completed by the end of 2005.
Exit Costs and Restructuring Reserves
(Dollars in millions)
Balance, January 1, 2004
FleetBoston exit costs
Restructuring charges
Infrastructure initiative
Cash payments
Balance, December 31, 2004
Exit Costs Restructuring
Reserves�1� Reserves�2�
$ - $ -
658 -
- 138
— 102
(276) (74)
$ 382 $ 166
�1� Exit costs reserves were established in purchase accounting resulting in an increase in
Goodwill.
�21 Restructunng reserves were established by a charge to income.
Unaudited Pro Forma Condensed Combined Financial Information
The following unaudited pro forma condensed combined financial
information presents the results of operations of the Corporation had
the Merger taken place at the beginning of each period.
�Dollars in millions, except per common share information� 2004 2003
Net interest income $ 30,584 $28,208
Noninterest income 21,615 21,877
Provision for credit losses 2,769 3,864
Gains on sales of debt securities 2,172 1,069
Merger and restructuring charges 618 —
Other noninterest expense 28,522 27,319
Income before income taxes 22,462 19,971
Net income 14,903 13,298
Per common share information
Earnings $ 3.67 $ 3.21
Diluted earnings 3.61 3.17
Average common shares issued and
outstanding (in thousands) 4,054,322 4,138,139
Average diluted common shares issued
and outstanding (in thousands) 4,124,671 4,201,053
National Processing, Inc.
On October 15, 2004, the Corporation acquired all outstanding
shares of National Processing, Inc. (NPC) for $1.4 billion in cash.
NPC is a merchant acquirer of card transactions. As a part of the pre-
liminary purchase price allocation, the Corporation allocated $482
million to other intangible assets and $625 million to Goodwill.
Note 3 Trading Account Assets and Liabilities
The Corporation engages in a variety of trading-related activities that
are either for clients or its own account.
The following table presents the fair values of the components
of Trading Account Assets and Liabilities at December 31, 2004
and 2003.
(Dollars in millions)
December 31 FleetBoston
2004 2003 April 1, 2004
Trading account assets
U.S. government and
agency securities $ 20,462 $ 16,073
Corporate securities,
trading loans and other 35,227 25,647
Equity securities 19,504 11,445
Mortgage trading loans and
asset-backed securities 9,625 8,221
Foreign sovereign debt 8,769 7,161
Total $ 93,587 $ 68,547
Trading account liabilities
U.S. government and
agency securities
Equity securities
Corporate securities,
trading loans and other
Foreign sovereign debt
Mortgage trading loans and
asset-backed securities
Total
$ 14,332 $ 7,304
8,952 8,863
8,538 5,379
4,793 5,276
39 22
$ 36,654 $ 26,844
$ 561
353
2
2,199
94
$ 3,209
$ 64
356
355
$ 775
Note 4 Derivatives
The Corporation designates a derivative as held for trading or hedg-
ing purposes when it enters into the derivative contract. The desig-
nation may change based upon managemenYs reassessment or
changing circumstances. Derivatives utilized by the Corporation
include swaps, financial futures and forward settlement contracts,
and option contracts. A swap agreement is a contract between two
parties to exchange cash flows based on specified underlying
notional amounts, assets and/or indices. Financial futures and for-
ward settlement contracts are agreements to buy or sell a quantity of
a financial instrument, index, currency or commodity at a predeter-
mined future date, and rate or price. An option contract is an agree-
ment that conveys to the purchaser the right, but not the obligation,
to buy or sell a quantity of a financial instrument (including another
derivative financial instrument), index, currency or commodity at a
predetermined rate or price during a period or at a time in the future.
Option agreements can be transacted on organized exchanges or
directly between parties. The Corporation also provides credit deriva-
tives to customers who wish to increase or decrease credit expo-
sures. In addition, the Corporation utilizes credit derivatives to
manage the credit risk associated with the loan portfolio.
Credit Risk Associated with Derivative Activities
Credit risk associated with derivatives is measured as the net
replacement cost in the event the counterparties with contracts in a
gain position to the Corporation completely fail to perform under the
terms of those contracts. In managing derivative credit risk, both the
current exposure, which is the replacement cost of contracts on the
measurement date, as well as an estimate of the potential change
in value of contracts over their remaining lives are considered. The
Corporation's derivative activities are primarily with financial institu-
tions and corporations. To minimize credit risk, the Corporation
enters into legally enforceable master netting agreements, which
reduce risk by permitting the closeout and netting of transactions
with the same counterparty upon occurrence of certain events. In
addition, the Corporation reduces credit risk by obtaining collateral
from counterparties. The determination of the need for and the lev-
els of collateral will vary based on an assessment of the credit risk
of the counterparty. Generally, the Corporation accepts collateral in
the form of cash, U.S. Treasury securities and other marketable
securities. The Corporation held $26.9 billion of collateral on deriv-
ative positions, of which $16.8 billion could be applied against
credit risk at December 31, 2004.
A portion of the derivative activity involves exchange-traded
instruments. Exchange-traded instruments conform to standard terms
and are subject to policies set by the exchange involved, including
margin and security deposit requirements. Management believes the
credit risk associated with these types of instruments is minimal.
BANK OF AMERICA 2004 111
�
_ I
�
•
�
The following table presents the contract/notional and credit basis have been reduced by the cash collateral held against
risk amounts at December 31, 2004 and 2003 of the Corporation's Derivative Assets. At December 31, 2004 and 2003, the cash collat-
derivative positions held for trading and hedging purposes. These eral held against Derivative Assets on the Consolidated Balance
derivative positions are primarily executed in the over-the-counter mar- Sheet was $9.4 billion and $7.5 billion, respectively. In addition, at
ket. The credit risk amounts take into consideration the effects of December 31, 2004 and 2003, the cash collateral placed against
legally enforceable master netting agreements, and on an aggregate Derivative Liabilities was $6.0 billion and $9.5 billion, respectively.
Derivatives�1�
(D011ars in millions)
Interest rate contracts
Swaps
Futures and fonvards
Written options
Purchased options
Foreign exchange contracts
Swaps
Spot, futures and fonvards
Written options
Purchased options
Equity contracts
Swaps
Futures and fonvards
Written options
Purchased options
Commodity contracts
Swaps
Futures and fonvards
Written options
Purchased options
Credit derivatives
Credit risk before cash collateral
Less: Cash collateral held
Total derivative assets
�1� Includes both long antl short Oenvative positions.
•
112 BANK OF AMERICA 2004
2004
Contract/
Notional
$11,597,813
1,833,216
988,253
1,243,809
305,999
956,995
167,225
163,243
34,130
4,078
37,080
32,893
10,480
6,307
9,270
5,535
499,741
December 31
Credlt
Risk
$ 12,705
332
4,840
7,559
3,593
679
1,039
5,741
2,099
6
301
430
39,624
9,389
$ 30,235
2003
Contract/
Notional
$8,873,600
2,437,907
1,174,014
1,132,486
260,210
775,105
138,474
133,512
30,850
3,234
25, 794
24,119
15,491
5,726
11,695
7,223
136,788
Credit
Risk
$14,893
633
3,471
4,473
4,202
669
364
5,370
1,554
294
584
36,507
7,498
$ 29,009
FleetBoston
April 1, 2004
Contract/ Credit
Notional Risk
$105,366 $1,671
18,383 2
104,118 -
159,408 91
9,928 307
33,941 403
2,854 -
2,776 58
1,026 127
779 -
811 55
275 -
29,763 75
2, 789
96
$ 2,693
The average fair value of Derivative Assets for 2004 and 2003 was
$28.0 billion and $27.8 billion, respectively. The average fair value
of Derivative Liabilities for 2004 and 2003 was $15.7 billion and
$15.9 billion, respectively. Included in the average fair value of
Derivative Assets and Derivative Liabilities in 2004 was $1.5 billion
and $920 million, respectively, from the addition of derivatives
acquired from FleetBoston.
ALM Process
Interest rate contracts and foreign exchange contracts are utilized in
the Corporation's ALM process. The Corporation maintains an overall
interest rate risk management strategy that incorporates the use of
interest rate contracts to minimize significant unplanned fluctuations
in earnings that are caused by interest rate volatility. The
Corporation's goal is to manage interest rate sensitivity so that move-
ments in interest rates do not significantly adversely affect Net
Interest Income. As a result of interest rate fluctuations, hedged
fixed-rate assets and liabilities appreciate or depreciate in market
value. Gains or losses on the derivative instruments that are linked
to the hedged fixed-rate assets and liabilities are expected to sub-
stantially offset this unrealized appreciation or depreciation. Interest
Income and Interest Expense on hedged variable-rate assets and
liabilities, respectively, increase or decrease as a result of interest
rate fluctuations. Gains and losses on the derivative instruments that
are linked to these hedged assets and liabilities are expected to sub-
stantially offset this variability in earnings.
Interest rate contracts, which are generally non-leveraged
generic interest rate and basis swaps, options and futures, allow the
Corporation to manage its interest rate risk position. Non-leveraged
generic interest rate swaps involve the exchange of fixed-rate and
variable-rate interest payments based on the contractual underlying
notional amount. Basis swaps involve the exchange of interest pay-
ments based on the contractual underlying notional amounts, where
both the pay rate and the receive rate are floating rates based on dif-
ferent indices. Option products primarily consist of caps, floors, swap-
tions and options on index futures contracts. Futures contracts used
for the ALM process are primarily index futures providing for cash pay-
ments based upon the movements of an underlying rate index.
The Corporation uses foreign currency contracts to manage the
foreign exchange risk associated with certain foreign currency-denom-
inated assets and liabilities, as well as the Corporation's equity
investments in foreign subsidiaries. Foreign exchange contracts,
which include spot, futures and forward contracts, represent agree-
ments to exchange the currency of one country for the currency of
another country at an agreed-upon price on an agreed-upon settle-
ment date. Foreign exchange option contracts are similar to interest
rate option contracts except that they are based on currencies rather
than interest rates. Exposure to loss on these contracts will increase
or decrease over their respective lives as currency exchange and
interest rates fluctuate.
Fair Value and Cash Flow Hedges
The Corporation uses various types of interest rate and foreign cur-
rency exchange rate derivative contracts to protect against changes
in the fair value of its fixed-rate assets and liabilities due to fluctua-
tions in interest rates and exchange rates. The Corporation also uses
these contracts to protect against changes in the cash flows of its
variable-rate assets and liabilities, and other forecasted transactions.
For cash flow hedges, gains and losses on derivative contracts
reclassified from Accumulated OCI to current period earnings are
included in the line item in the Consolidated Statement of Income in
which the hedged item is recorded and in the same period the hedged
item affects earnings. During the next 12 months, net losses on deriv-
ative instruments included in Accumulated OCI, of approximately $136
million (pre-tax) are expected to be reclassified into earnings. These
net gains reclassifled into earnings are expected to increase income
or decrease expense on the respective hedged items.
The following table summarizes certain information related to
the Corporation's hedging activities for 2004 and 2003.
(DO��ars in millions) 2004 2003
Fair value hedges
Hedge ineffectiveness recognized in earnings�l� $ 10 $ -
Net loss excluded from assessment of effectiveness�z� (6) (101)
Cash flow hedges
Hedge ineffectiveness recognized in earnings�3� 104 53
Net gain excluded from assessment of effectiveness - 26
Net investment hedges
Gains (losses) included in foreign currency
translation adjustments within accumulated
other comprehensive income (157) (194)
(1) Includetl $(8) recorded in Net Interest Income antl $18 recortletl in Mortgage Banking Income in
the Consolitlated Statement of Income in 2004.
�21 Included $(5) and $(101), respectively, recorded in Net Interest Income related to the excluded
time value of certain hedges and $(1) an0 $0, respectivery, recordetl in Mortgage Banking
Income in the Consolidatetl Statement of Income in 2004 and 2003.
�3� Included $117 and $38, respectively, recorded in Mortgage Banking Income in the Consolidated
Statement of Income for 2004 antl 2003, and $(13) antl $15 recorded in Net Interest Income
from oNer vanous cash flow hetlges in 2004 antl 2003, respectively.
BANK OF AMERICA 2004 113
•
�
•
•
� �
�
•
Note 5 Securities
The amortized cost, gross unrealized gains and losses, and fair value of AFS debt and marketable equity securities, and Held-to-maturity
Securities at December 31, 2004, 2003 and 2002 were:
(Dollars in millions)
Available-for-sale securities
2004
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Treasury securities and agency debentures $ 826 $ - $ 1 $ 825
Mortgage-backed securities 173,697 174 624 173,247
Foreign sovereign securities 7,437 36 26 7,447
Other taxable securities __ _ ____ __ 9,493 - 13 9,480
Total taxable 191,453 210 664 190,999
Tax-exempt securities 3,662 87 5 3,744
Totai availabl�for-sale securities $195,115 $ 297 $ 669 $194,743
Available-for-sale marketable equity securkies�1� __ $ 3,571 $ 32 $ 2 $ 3,601
2003 -------------
U.S. Treasury securities and agency debentures $ 710 $ 5 $ 2 $ 713
Mortgage-backed securities 56,403 63 575 55,891
Foreign sovereign securities 2,816 23 38 2,801
_Other taxable securities __ ___ _ _ 4,765 36 69 4,732
Total taxable 64,694 127 684 64,137
_Tax-exempt securities 2,167 79 1 2,245
- - --------- - -----.._..---
Total available-for-sale securRfes $ 66,861 $ 206 $ 685 $ 66,382
Available-for-sale marketable equity securities�l� $ 2,803 $ 394 $ 31 $ 3,166
2002 -- ---
U.S. Treasury securities and agency debentures $ 691 $ 20 $ - $ 711
Mortgage-backed securities 58,813 847 5 59,655
Foreign sovereign securities 2,235 30 103 2,162
Other taxable securities 1,095 25 38 1,082
Total taxable 62,834 922 146 63,610
Tax-exempt securities 2,824 96 4 2,916
-- --- -- -------- -- ----------- ------------- --
Total avaflable-for-sale securities $ 65,658 $1,018 $ 150 $ 66,526
Avaflable-for-sale marketable equity securfties�1� $ 2,761 $ 19 $ 127 $ 2,653
--- - ----------------------------- -
Held-to-maturity securities
2004
Taxable securities $ 41 $ 4 $ 4 $ 41
Tax2xempt securities 2gg _ 1 2gg
Total held-to-maturity securitfes $ 330 $ 4 $ 5 $ 329
Mortgage-backed securities
Foreign sovereign securities
Other taxable securities
Total taxable
Tax-exempt securities
Total held-to-maturity securities
2002
Mortgage-backed securities
Foreign sovereign securities
Other taxable securities
Total taxable
Tax-exempt securities
Total held-tamaturity securlties
$ 1 $ -
49 -
46 3
--gs --------3
151 7
$ 247-- --$ 10
$ 3 $ -
788 10
45 4
-836 ------ ---14
190 10
$ 1,026 ---- --$ _-24
�11 Represents those AFS marketable equiry secunties that are rewrtletl in Other Assets on the Consolidatetl Balance Sheet.
At December 31, 2004, accumulated net unrealized losses on AFS
debt and marketable equity securities included in Shareholders'
Equity were $196 million, net of the related income tax benefit of
$146 million. At December 31, 2003, accumulated net unrealized
114 BANK OF AMERICA 2004
$ - $ 1
3 46
- 49
- -- 3 ---------96
- 158
$ 3 $ 254
$ - $ 3
49 749
- 49
49 801
- 200
$ 49 -----$ __1,001
losses on these securities were $70 miilion, net of the related
income tax benefit of $46 million.
The following table presents the current fair value and the
associated unrealized losses only on investments in securities with
unrealized losses at December 31, 2004. Unrealized losses on
marketable equity securities at December 31, 2004 were not con- have had unrealized losses for less than 12 months, or for 12
sidered material. The table also discloses whether these securities months or longer.
Less than 12 months 12 months or longer Total
(Dollars in millions) Fair Value Unrealized Losses __ Fair Value Unrealized Losses Fair Value Unrealized Losses
Available-for-sale securitles
U.S. Treasury securities and agency debentures�1� $ 381 $ (1) $ 22 $ - $ 403 $ (1)
Mortgage-backed securities 52,687 (297) 17,426 (327) 70,113 (624)
Foreign sovereign securities 4,964 (11) 99 (15) 5,063 (26)
Other taxable securities 1,130 (9) 37 (4) 1,167 (13)
Total taxable 59,162 (318) 17,584 (346) 76,746 (664)
Tax-exempt securities�l> 1,088 (5) 21 - 1,109 ___ (5)
--- -- ------ -- ----- ---
Total temporarily-impaired available-for-sale securities 60,250 (323) 17,605 __(346) _77,855 (669)
Temporarily-impalred marketable equlty securities __ _ 83 _ _ _ (2) _ ____ _ _ _ 83 _ _ (2)
Held-to-maturity securities
Taxable securities 41 (4) - - 41 (4)
Tax-exempt securities 288 (1) - -
288 (1)
Total temporarily-impaired held-to-maturity securities 329 (5) - 329 (5)
Total temporarily-impaired securities $ 60,662 $ (330) $ 17,605 $ (346) $ 78,267 $ (676)
�11 Unrealized losses less than $500,000 are shown as zero.
The unrealized losses associated with U.S. Treasury securities and
agency debentures, mortgage-backed securities, certain foreign sov-
ereign securities, other taxable securities and tax-exempt securities
are not considered to be other-than-temporary because their unreal-
ized losses are related to changes in interest rates and do not affect
the expected cash flows of the underlying collateral or issuer. The
Corporation also has unrealized losses associated with other foreign
sovereign securities; however, these losses are not considered other-
than-temporary because the principal of these securities is guaran-
teed by the U. S. government.
The Corporation had investments in Securities from the Federal
National Mortgage Association (Fannie Mae) and Federal Home Loan
Mortgage Corporation (Freddie Mac) that exceeded 10 percent of con-
solidated Shareholders' Equity as of December 31, 2004 and 2003.
Those investments had market values of $133.6 billion and $35.8
•
billion, respectively, at December 31, 2004 and $36.6 billion and
$5.9 billion, respectively, as of December 31, 2003. In addition,
these investments had total amortized costs of $132.9 billion and
$35.9 billion, respectively, as of December 31, 2004 and $37.1 bil-
lion and $6.0 billion, respectively, as of December 31, 2003.
Securities are pledged or assigned to secure borrowed funds,
government and trust deposits, and for other purposes. The carrying
value of pledged Securities was $45.1 billion and $20.9 billion at �
December 31, 2004 and 2003, respectively.
The contractual maturity distribution and yields of the
Corporation's securities portfolio at December 31, 2004 are
summarized in the following table. Actual maturities may differ
from the contractual or expected maturities shown below since
borrowers may have the right to prepay obligations with or without
prepayment penalties.
Due after 1 Due after 5
Due in 1 year year through 5 years through Due after
or less years 10 years 10 years�11 7otal
�ooiiars in miwons) Amount Yield�2� Amount Yield(2) Amount Yield�2� Amount Yield�2� Amount Yield�2�
Fair value of available-for-sale securities
U.S. Treasury securities and agency debentures $ 101 1.94% $ 576 3.04% $ 131 3.86k $ 17 5.40% $ 825 3.09°�
Mortgage-backed securities 4 2.15 91,665 5.08 65,622 5.31 15,956 5.51 173,247 5.21
Foreign sovereign securities 757 4.90 1,377 2.46 1,799 3.04 3,514 3.98 7,447 3.56
Other taxable securities 140 2.90 2,614 3.56 2,877 4.98 3,849 5.56 9,480 4.81
Total taxable 1,002 4.31 96,232 4.99 70,429 5.23 23,336 5.29 190,999 5.11
Tax-exempt securities�3� 924 2.55 181 4.52 1,554 6.11 _ 1,085 6.54 _ 3,744 5.28
Total avaflable-for-sale securities $ 1,926 3.47°� $ 96,413 4.99°h $ 71,983 5.25�0 $ 24,421 5.34°,6 $ 194,743 5.12°k
Amortized cost of available-for-sale securities $ 1,926 $ 96,439 $ 72,010 $ 24,740 $ 195,115
Amortized cost of held-to-maturity securities
Taxable securities $ 41 2.30% $ - -% $ - -0k $ - -% $ 41 2.30%
Tax-exempt securities�3� 258 1.72 26 2.70 4 4.37 1 0.26 289 1.85
Total held-tamaturity securities $ 299 1.80% $ 26 2.70% $ 4 4.37°� $ 1 0.26°h $ 330 1.90°k
Fair value of held-to-maturlty securities $ 298 $ 26 $ 4 $ 1 $ 329
ll) Includes secunties with no stated matunty.
(2� Yieltls are calculated based on the amortized cost of the secunties.
(3) Yield of tax-exempt secunties calculated on a fulry taxabl�equivalent basis. •
BANK OF AMERICA 2004 115
�
�J
•
The components of realized gains and losses on sales of debt secu-
rities for 2004, 2003 and 2002 were:
(Dollars in millions) 2004 2003 2002
Gross gains $ 2,270 $1,246 $1,035
Gross losses (147) (305) (405)
Net gains on sales
of debt securities $ 2,123 $ 941 $ 630
The Income Tax Expense attributable to realized net gains on debt
securities sales was $788 million, $329 million and $220 million in
2004, 2003 and 2002, respectively.
Note 6 Outstanding Loans and Leases
Outstanding loans and leases at December 31, 2004 and 2003 were:
December 31 FleetBoston
(D011ars in millions) 2004 2003 April 1, 2004
Consumer
Residential mortgage $178,103 $140,513 $ 34,571
Credit card 51,726 34,814 6,848
Home equity lines 50,126 23,859 13,799
Direct/Indirect consumer 40,513 33,415 6,113
Other consumer�l� 7,439 7,558 1,272
Total consumer 327,907 240,159 62,603
Commercial
Commercial - domestic 122,095 91,491 31,796
Commercial real estate�z� 32,319 19,367 9,982
Commercial lease financing 21,115 9,692 10,720
Commercial - foreign 18,401 10,754 9,160
Total commercial 193,930 131,304 61,658
Total $521,837 $371,463 $124,261
(11 Inclutles consumer finance, foreign consumer and consumer lease financing of $3,395,
$3,563 and $481 at December 31, 2004, respectively, and $3,905, $1,969 and $1,684 at
December 31, 2003, respectively.
�2� Inclutles domestic antl foreign commercial real estate loans of $31,879 antl $440 at
December 31, 2004, respectively, antl $19,043 and $324 at December 31, 2003, respectively.
The Corporation sold whole mortgage loans and recognized gains
(losses) in Other Income on the Consolidated Statement of Income
of $(2) million, $772 million and $500 million for 2004, 2003 and
2002, respectively.
The following table presents the gross recorded investment in spe-
cific loans, without consideration to the specific component of the
Allowance for Loan and Lease Losses, that were considered individu-
ally impaired in accordance with SFAS 114 at December 31, 2004
and 2003. SFAS 114 impairment includes performing troubled debt
restructurings, and excludes all commercial leases.
December 31 FleetBoston
�oo�iars in mi��ions) 2004 2003 April 1, 2004
Commercial - domestic $ 868 $1,404 $349
Commercial real estate 87 153 85
Commercial - foreign 273 581 480
Total Impaired loans $1,228 $ 2,138 $ 914
116 BANK OF AMERICA 2004
The average recorded investment in certain impaired loans for 2004,
2003 and 2002 was approximately $1.6 billion, $3.0 billion and $3.9
billion, respectively. At December 31, 2004 and 2003, the recorded
investment in impaired loans requiring an Allowance for Loan and
Lease Losses based on individual analysis per SFAS 114 guidelines
was $926 miilion and $2.0 billion, and the related Allowance for Loan
and Lease Losses was $202 million and $391 million, respectively.
For 2004, 2003 and 2002, Interest Income recognized on impaired
loans totaled $21 million, $105 million and $156 million, respec-
tively, all of which was recognized on a cash basis.
At December 31, 2004 and 2003, nonperforming loans and
leases, including impaired loans and nonaccrual consumer loans,
totaled $2.2 billion and $2.9 billion, respectively. Nonperforming
securities, which are primarily related to international securities
held in the AFS securities portfolio, were obtained through troubled
debt restructurings, largely acquired through FleetBoston, and
amounted to $140 million at December 31, 2004. In addition,
included in Other Assets were nonperForming loans held-for-sale and
leveraged lease partnership interests of $151 million and $202 mil-
lion at December 31, 2004 and 2003, respectively.
Foreclosed properties amounted to $102 million and $148 mil-
lion at December 31, 2004 and 2003, respectively, and are included
in Other Assets on the Consolidated Balance Sheet. The cost of
carrying foreclosed properties in 2004, 2003 and 2002 amounted to
$3 million, $3 million and $7 million, respectively.
Note 7 Allowance for Credit Losses
The following table summarizes the changes in the allowance for
credit losses for 2004, 2003 and 2002:
(D011ars in millions) 2004 2003 2002
Allowance for loan and
lease losses, January 1 $ 6,163 $ 6,358 $ 6,278
FleetBoston balance, April 1, 2004 2,763 - -
Loans and leases charged off (4,092) (3,867) (4,460)
Recoveries of loans and leases
previously charged off 979 761 763
-- ------ ..----------------------
Net charge-offs (3,113) (3,106) (3,697)
Provision for loan and lease losses 2,868 2,916 3,801
Transfers«� (55) (5) (24)
Allowance for loan and
lease losses, December 31 8,626 6,163 6,358
Reserve for unfunded lending
commitments, January 1 416 493 597
FleetBoston balance, April 1, 2004 85 - -
Provision for unfunded
lending commitments (99) (77) (104)
Reserve for unfunded lendfng
commitments, December 31 402 416 493
-- -- ----- - - - -- - -
Total $ 9,028 $ 6,579 $ 6,851
i11 Includes pnmanty transfers to loans held-for-sale.
Note 8 Special Purpose Financing Entities
The Corporation securitizes assets and may retain a portian or all of
the securities, subordinated tranches, interest-only strips and, in
some cases, a cash reserve account, all of which are considered
retained interests in the securitized assets. Those assets may be
serviced by the Corporation or by third parties. The Corporation
also uses other special purpose financing entities to access the
commercial paper market and for other lending, leasing and real
estate activities. See Note 1 of the Consolidated Financial
Statements for a more detailed discussion of securitizations and
other special purpose financing entities.
Mortgage-related Securitizations
The Corporation securitizes the majority of its residential mortgage
loan originations in conjunction with or shortly after loan closing. In
addition, the Corporation may, from time to time, securitize commer-
cial mortgages and first residential mortgages that it originates or
purchases from other entities. In 2004 and 2003, the Corporation
converted a total of $96.9 billion (including $18.0 billion originated
by other entities) and $121.1 billion (including $13.0 billion originated
by other entities), respectively, of residential first mortgages and com-
mercial mortgages into mortgage-backed securities issued through
Fannie Mae, Freddie Mac, Government National Mortgage Association
(Ginnie Mae), Bank of America, N.A. and Banc of America Mortgage
Securities. At December 31, 2004 and 2003, the Corporation retained
$9.2 billion (including $1.2 billion issued prior to 2004) and $1.7 bil-
lion of securities, respectively. At December 31, 2004, these retained
interests were valued using quoted market prices.
For 2004, the Corporation reported $952 million in gains on
loans converted into securities and sold, of which $886 million was
from loans originated by the Corporation and $66 million was from
loans originated by other entities. For 2003, the Corporation reported
$2.4 billion in gains on loans converted into securities and sold, of
which $2.0 billion was from loans originated by the Corporation
and $381 million was from loans originated by other entities. At
December 31, 2004, the Corporation had recourse obligations of
$558 million with varying terms up to seven years on loans that had
been securitized and sold.
In addition to the retained interests in the securities, the
Corporation has retained MSRs from the sale or securitization of res-
idential mortgage loans. Servicing fee and ancillary fee income on all
loans serviced, including securitizations, was $568 million and $314
million in 2004 and 2003, respectively. The activity in MSRs for 2004
and 2003 is as follows:
(D011ars in millions) 2004 2003
Balance, January 1 $ 479 $ 499
Additions�1� 3,036 201
Amortization (360) (145)
Change in value attributed to SFAS 133 hedged MSRscz� (210) —
Impairment, net of recoveries (463) (76)
Balance, December 31�3�4� $ 2,482 $ 479
�11 Includes $2.2 billion of Certificates converted to MSRs on June 1, 2004.
(2) Ezcludes $228 of offsetting tlerivative hedge gains recognized in Mortgage Banking Income
for 2004.
�31 Net of impairment allowance of $361 for 2004.
(41 2003 tloes not include $2.3 billion of Certificates.
The estimated fair value of MSRs was $2.5 billion and $479 mil-
lion at December 31, 2004 and 2003, respectively. The additions
during 2004 included $2.2 billion of MSRs as a result of the con-
version of Certificates discussed in Note 1 of the Consolidated
Financial Statements.
The key economic assumptions used in valuations of MSRs
include modeled prepayment rates and resultant expected weighted
average lives of the MSRs and the option adjusted spread (OAS) levels.
An OAS model runs multiple interest rate scenarios and projects pre-
payments specific to each one of those interest rate scenarios.
As of December 31, 2004, the modeled weighted average lives
of MSRs related to fixed and adjustable rate loans (including hybrid
ARMs) were 4.65 years and 3.02 years, respectively. A decrease of
10 and 20 percent in modeled prepayments would extend the
expected weighted average lives for MSRs related to fixed rate loans
to 5.01 years and 5.40 years, respectively, and would extend the
expected weighted average lives for MSRs related to adjustable rate
loans to 3.32 years and 3.68 years, respectively. The expected exten-
sion of weighted average lives would increase the value of MSRs by
a range of $143 million to $295 million. An increase of 10 and 20
percent in modeled prepayments would reduce the expected
weighted average lives for MSRs related to fixed rate loans to 4.38
years and 4.11 years, respectively, and would reduce the expected
weighted average lives for MSRs related to adjustable rate loans to
2.78 years and 2.57 years, respectively. The expected reduction of
weighted average lives would decrease the value of MSRs by a range
of $112 million to $219 million. A decrease of 100 and 200 basis
points (bps) in the OAS level would result in an increase in the value
of MSRs ranging from $89 million to $185 million, and an increase
of 100 and 200 bps in the OAS level would result in a decrease in
the value of MSRs ranging from $83 million to $160 million.
For purposes of evaluating and measuring impairment, the
Corporation stratifies the portfolio based on the predominant risk
characteristics of �oan type and note rate. Indicated impairment, by
risk stratification, is recognized as a reduction in Mortgage Banking
Income, through a valuation allowance, for any excess of adjusted car-
rying value over estimated fair value. Impairment, net of recoveries of
MSRs totaled $463 million for 2004. For 2003, changes in the value
of the Certificates and MSRs were recognized as Trading Account
Profits. Impairment charges in 2004 included changes to valuation
assumptions and prepayment adjustments related to expectations
regarding future prepayment speeds and other assumptions totaling
$261 million. Additional impairment reflects decreases in the value of
MSRs primarily due to increased probability of prepayments driven by
decreases in market interest rates during the second half of 2004.
Other Securitizations
As a result of the Merger, the Corporation acquired an interest in sev-
eral credit card, home equity loan and commercial loan securitization
vehicles, which had aggregate debt securities outstanding of $10.3
billion as of December 31, 2004. During 2004, the Corporation secu-
ritized $2.0 billion of automobile loans and retained $1.7 billion of
the AAA securities, which are held in the AFS securities portfolio.
BANK OF AMERICA 2004 117
r
�
�
•
�
�
At December 31, 2004 and 2003, investment grade securities
of $2.9 billion and $2.1 billion, respectively, which are valued using
quoted market prices remained in the AFS securities portfolio. At
December 31, 2004 there were no recognized servicing assets
associated with these securitization transactions.
The Corporation has provided protection on a subset of one
consumer finance securitization in the form of a guarantee with a
maximum payment of $220 million that will only be paid if over-
collateralization is not sufficient to absorb losses and certain other
conditions are met. The Corporation projects no payments will be due
over the life of the contract, which is approximately one year.
Key economic assumptions used in measuring the fair value of
certain residual interests (included in Other Assets) in securitizations
and the sensitivity of the current fair value of residual cash flows to
changes in those assumptions are as follows:
Home
Subprime Consumer Automobile Equity Commercial
Credit Card Finance�1� Loans�2� Lines Loans
(D011ars in millions) 2004 2003 2004 2003 2004 2004 2004
Carrying amount of residual interests (at fair value)�2� $ 349 $ 76 $ 313 $ 328 $ 34 $ 17 $ 130
Balance of unamortized securitized loans 6,903 1,782 5,886 9,409 1,644 630 3,337
Weighted average Ilfe to call (in years)�3� 1.2 1.4 1.3 1.6 1.4 1.3 n/a
Revolving structures - annual payment rate 13.7% 14.9% 45.0% 4.5°h�^�
Amortizing structures - annual constant prepayment rate:
Fixed rate loans 7.5-32.7% 7.8-32.6% 24.9%
Adjustable rate loans 27.0-40.8 27.0-42.4 -
Impact on fair value of 100 bps favorable change $ 1 $ - $ 1 $ 4 $ - $ - $ 2
Impact on fair value of 200 bps favorable change 2 - 11 11 - 1 2
Impact on fair value of 100 bps adverse change (i) - (9) (11) - - (1)
Impact on fair value of 200 bps adverse change (2) - (17) (15) (1) (1) (1)
Expected credit losses�5� 5.3-9.7% 5.3°� 5.1-12.3°� 4.6-11.0% 1.6% 0.2% 0.4°,6
Impact on fair value of 10°� favorable change $ 18 $ 2 $ 27 $ 37 $ 3 $ - $ 1
Impact on fair value of 25°� favorable change 47 5 71 100 6 - 2
Impact on fair value of 10% adverse change (15) (2) (27) (37) (2) - (1)
Impact on fair value of 25% adverse change (27) (5) (68) (82) (6) - (2)
Residual cash flows discount rate (annual rate) 6.0-12.0% 6.0% 15.0-30.0% 15.0-30.0°� 20.0% 12.0% 12.3%
Impact on fair value of 100 bps favorable change $ - $ - $ 6 $ 8 $ 1 $ - $ 1
Impact on fair value of 200 bps favorable change - - 12 16 1 - 2
Impact on fair value of 100 bps adverse change - - (6) (8) (1) - (1)
Impact on fair value of 200 bps adverse change - - (12) (15) (1) - (2)
(11 Subprime consumer finance includes subprime real estate loan and manufactured housing loan securitizations, which are all serviced by third parties.
(2) Residual interests inclutle interest-Only strips, one or more subortlinatetl tf2nches, accrued interest receiva�le, antl in some cases, a cash reserve account.
�31 Before any optional clean-up calls are exewted, economic analyses will be pertormed.
(41 Monthly average net pay rate (Day rate less draw rate).
�5� Annual rates of expectetl creAit losses are presentetl for cretlit car0. home equiry lines antl commercial secuntizations. Cumulative lifetime rates of expected credit losses (incurreU plus prqected) are
presentetl for subprime consumer finance securitizations and the auto loan securitizations.
n/a = not applicable
The sensitivities in the preceding table are hypothetical and should
be used with caution. As the amounts indicate, changes in fair value
based on variations in assumptions generally cannot be extrapolated
because the relationship of the change in assumption to the change
in fair value may not be linear. Also, the effect of a variation in a par-
ticular assumption on the fair value of the retained interest is cal-
culated without changing any other assumption. In reality, changes in
one factor may result in changes in another, which might magnify or
counteract the sensitivities. Additionally, the Corporation has the
ability to hedge interest rate risk associated with retained residual
positions. The above sensitivities do not reflect any hedge strategies
that may be undertaken to mitigate such risk.
Static pool net credit losses are considered in determining the
value of retained interests. Static pool net credit losses include
actual losses incurred plus projected credit losses divided by the orig-
inal balance of each securitization pool. Expected static pool net
118 BANK OF AMERICA 2004
credit losses at December 31, 2004 for the 2004 auto loan securiti-
zation were 1.63 percent. For the subprime consumer finance secu-
ritizations, weighted average static pool net credit losses for 2001,
1999, 1998, 1997 and 1995 were 5.93 percent, 11.67 percent,
9.20 percent, 4.92 percent and 12.25 percent, respectively at
December 31, 2004, and 5.83 percent, 9.91 percent, 8.22 percent,
4.92 percent and 10.83 percent, respectively, at December 31, 2003.
Proceeds from collections reinvested in revolving credit card
securitizations were $6.8 billion and $3.8 billion in 2004 and 2003,
respectively. Credit card servicing fee income totaled $134 million
and $51 million in 2004 and 2003, respectively. Other cash flows
received on retained interests, such as cash flows from interest-only
strips, were $345 million and $279 million in 2004 and 2003,
respectively, for credit card securitizations. Proceeds from
collections reinvested in revolving commercial loan securitizations
were $1.1 billion in 2004. Servicing fees and other cash flows
received on retained interests, such as cash flows from interest-only
strips, were $4 million and $11 million, respectively, in 2004 for
commercial loan securitizations.
The Corporation reviews its loans and leases portfolio on a man-
aged basis. Managed loans and leases are defined as on-balance
sheet Loans and Leases as well as loans in revolving securitizations,
which include credit cards, home equity lines and commercial loans.
New advances under previously securitized accounts will be recorded
on the Corporation's Consolidated Balance Sheet after the revolving
period of the securitization, which has the effect of increasing Loans
and Leases on the Corporation's Consolidated Balance Sheet and
increasing Net Interest Income and charge-offs, with a corresponding
reduction in Noninterest Income. Portfolio balances, delinquency and
historical loss amounts of the managed loans and leases portfolio
for 2004 and 2003 were as follows:
December 31, 2004 December 31, 2003
Principal Principal
Total Amount of Principal Total Amount of Principal
Principal Accruing Loans Amount of Principal Accruing Loans Amount of
Amount of and Leases Nonpertorming Amount of and Leases Nonperforming
Loans and Past Due 90 Loans and Loans and Past Due 90 Loans and
�oonars in miiiions� Leases Days or More�l� Leases Leases Days or More�11 Leases
Residential mortgage $178,103 $ - $ 554 $140,513 $ - $ 531
Credit card 58,629 1,223 - 36,596 647 -
Home equity lines 50,756 3 66 23,859 - 43
Direct/Indirect consumer 40,513 58 33 33,415 47 28
Other consumer 7,439 23 85 7,558 35 36
Total consumer 335,440 1,307 738 241,941 729 638
Commercial - domestic 125,432 121 855 91,491 108 1,388
Commercial real estate 32,319 1 87 19,367 23 141
Commercial lease financing 21,115 14 266 9,692 2 127
Commercial - foreign 18,401 2 267 10,754 29 578
Total commercial 197,267 138 1,475 131,304 162 2,234
Total managed loans and leases 532,707 $1,445 $2,213 373,245 $ 891 $2,872
Loans in revolving securitizations (10,870) (1,782) _ _ _ __
Total held loans and leases $521,837 $371,463
(D011ars in millions)
Residential mortgage
Credit card
Home equity lines
Direct/Indirect consumer
Other consumer
Total consumer
Commercial - domestic
Commercial real estate
Commercial lease financing
Commercial - foreign
Total commercial
Total managed loans and leases
Loans in revolving securitizations
Total held loans and leases
Year Ended December 31, 2004
Average
Loans and Loans and
Leases Leases Net Net Loss
Outstanding Losses Ratio�21
$167,298 $ 36 0.02%
50,296 2,829 5.62
39,942 15 0.04
38,078 208 0.55
7,717 193 2.50
303,331 3,281 1.08
117,422 184 0.16
28,085 (3) (0.01)
17,483 9 0.05
16,505 173 1.05
179,495 363 0.20
482,826 $ 3,644 0.75%
(10,181) �-�----+���
$ 472,645
Year Ended December 31, 2003
Average
Loans and Loans and
Leases Leases Net Net Loss
Outstanding Losses Ratio�21
$127,059 $ 40 0.03%
31,552 1,691 5.36
22,890 11 0.05
32,593 181 0.55
8,865 256 2.89
222,959 2,179 0.98
93,458 633 0.68
20,042 41 0.20
10,061 124 1.23
12,970 306 2.36
136,531 1,104 0.81
359,490 $3,283 0.91°�
(3,342)
$ 356,148
�11 Ezclutles consumer real estate loans, which are placed on nonperforming status at 90 days past due.
(21 The net loss ratio is calculated by dividing managetl loans and leases net losses by average managed loans and leases outstanding for each loan and lease category.
Variable Interest Entities
At December 31, 2004, the assets and liabilities of ABCP conduits
that have been consolidated in accordance with FIN 46 were reflected
in AFS Securities, Other Assets, and Commercial Paper and Other
Short-term Borrowings in the Global Capital Markets and Investment
Banking business segment. As of December 31, 2004 and 2003, the
Corporation held $7.7 billion and $5.6 billion of assets in these enti-
ties, respectively, while the Corporation's maximum loss exposure
associated with these entities including unfunded lending commit-
ments was approximately $9.4 billion and $7.6 billion, respectively.
The Corporation also had contractual relationships with other con-
BANK OF AMERICA 2004 119
•
��
•
•
��
•
solidated VIEs that engage in leasing or lending activities or real
estate joint ventures. As of December 31, 2004 and 2003, the
amount of assets of these entities was $560 million and $382 mil-
lion, respectively, and the Corporation's maximum possible loss expo-
sure was $132 million and $131 million, respectively.
Additionally, the Corporation had significant variable interests in
other VIEs that it did not consolidate because it was not deemed to
be the primary beneficiary. In such cases, the Corporation does not
absorb the majority of the entities' expected losses nor does it
receive a majority of the entities' expected residual returns, or both.
These entities typically support the financing needs of the
Corporation's customers by facilitating their access to the commer-
cial paper markets. The Corporation functions as administrator and
provides either liquidity and letters of credit, or derivatives to the VIE.
The Corporation also provides asset management and related serv-
ices to other special purpose vehicles that engage in lending, invest-
ing, or real estate activities. Total assets of these entities at
December 31, 2004 and 2003 were approximately $32.9 billion and
$28.0 billion, respectively; revenues associated with administration,
liquidity, letters of credit and other services were approximately $154
million in 2004 and $94 million in 2003. At December 31, 2004 and
2003, the Corporation's maximum loss exposure associated with
these VIEs was approximately $25.0 billion and $21.7 billion, respec-
tively, which is net of amounts syndicated.
Management does not believe losses resulting from its involve-
ment with the entities discussed above will be material. See Note 1
of the Consolidated Financial Statements for additional discussion of
special purpose financing entities.
Note 9 Goodwill and Other Intangibles
The following table presents allocated Goodwill at December 31,
2004 and 2003 for each business segment. The increases from
December 31, 2003 were primarily due to the Merger and the acqui-
sition of NPC, which added approximately $33.2 billion and $625 mil-
lion, respectively, of Goodwill.
December 31
(DOliars in miilions) 2004 2003
Global Consumer and Small Business Banking $22,501 $ 6,000
Global Business and Financial Services 13,269 1,144
Global Capital Markets and Investment Banking 4,500 1,953
Global Wealth and Investment Management 4,727 2,223
All Other 265 135
Total $45,262 $11,455
(D011ars in millions)
Certificates of deposit of $100 thousand or more
Other time deposits of $100 thousand or more
120 BANK OF AMERICA 2004
Three
months
or less
$ 2Q253
154
The gross carrying value and accumulated amortization related to
core deposit intangibles and other intangibles at December 31, 2004
and 2003 are presented below:
December 31
2004 2003
Gross Gross
Carrying Accumulated Carrying Accumulated
��onars �n mwions� Value Amortization Value Amortization
Core deposit intangibles $ 3,668 $1,354 $1,495 $ 886
Other intangibles 2,256 683 787 488
---- ----..----------------- -------
Total $ 5,924 $ 2,037 $ 2,282 $1,374
As a result of the Merger, the Corporation recorded $2.2 billion of
core deposit intangibles, $660 million of purchased credit card rela-
tionship intangibles and $409 million of other customer relationship
intangibles. As of December 31, 2004, the weighted average amorti-
zation period for the core deposit intangibles as well as the other
intangibles was approximately 9 years. As a result of the acquisition
of NPC, the Corporation preliminarily allocated $482 million to other
intangibles with a weighted average amortization period of approxi-
mately 10 years as of December 31, 2004. Included in this number
is $84 million related to trade names, to which we have assigned an
indefinite life.
Amortization expense on core deposit intangibles and other
intangibles was $664 million, $217 million and $218 million for
2004, 2003 and 2002, respectively. The Corporation estimates that
aggregate amortization expense wilt be $809 million, $745 million,
$602 miliion, $499 million and $393 million for 2005, 2006, 2007,
2008 and 2009, respectively.
Note 10 Deposits
The Corporation had domestic certificates of deposit of $100 thou-
sand or more totaling $56.2 billion and $32.8 billion at December
31, 2004 and 2003, respectively. The Corporation had other domes-
tic time deposits of $100 thousand or more totaling $1.1 billion and
$1.0 billion at December 31, 2004 and 2003, respectively. Foreign
certificates of deposit and other foreign time deposits of $100 thou-
sand or more totaled $28.6 billion and $15.4 billion at December 31,
2004 and 2003, respectively.
The following table presents the maturities of domestic certifi-
cates of deposit of $100 thousand or more and of other domestic
time deposits of $100 thousand or more at December 31, 2004.
Over Over
three months six months to
to six months twelve months
$ 11,588 $ 17,904
117 96
Thereafter Total
$ 6,410 $ 56,155
758 1,125
At December 31, 2004, the scheduled maturities for total time
deposits were as follows:
(Dollars in millions)
Due in 2005 $152,317
Due in 2006 9,206
Due in 2007 6,810
Due in 2008 2,033
Due in 2009 2,828
Thereafter 1,334
Total $174,528
Note 11 Short-term Borrowings and Long-term Debt
Short-term Borrowings
Bank of America Corporation and certain other subsidiaries issue
commercial paper in order to meet short-term funding needs.
Commercial paper outstanding at December 31, 2004 was $25.4 bil-
lion compared to $7.6 billion at December 31, 2003.
Bank of America, N.A. maintains a domestic program to offer up
to a maximum of $60.0 billion, at any one time, of bank notes with
fixed or floating rates and maturities of at least seven days from the
date of issue. Short-term bank notes outstanding under this program
totaled $9.6 billion at December 31, 2004 compared to $3.3 billion
at December 31, 2003. These short-term bank notes, along with
Treasury tax and loan notes, term federal funds purchased and com-
mercial paper, are reflected in Commercial Paper and Other Short-
term Borrowings on the Consolidated Balance Sheet.
Long-term Debt
The following table presents Long-term Debt at December 31, 2004
and 2003:
December 31
(D011ars in millions) 2004 2003
Notes issued by
Bank of America Corporationcla�
Senior notes:
Fixed, ranging from 1.62°� to 7.25%,
due 2005 to 2028 $ 4,102 $ 8,219
Floating, ranging from 0.20% to 8.33%,
due 2005 to 2043 46,641 28,669
Subordinated notes:
Fixed, ranging from 3.95°,6 to 8.63%,
due 2005 to 2029 2,866 2,299
Floating, ranging from 1.63k to 5.25°�,
due 2005 to 2037 19,683 16,742
Junior subordinated notes
(related to trust preferred securities):
Fixed, ranging from 6.00% to 11.45%,
due 2026 to 2033 2,498 2,127
Floating, ranging from 2.07°� to 3.56°�,
due 2026 to 2034 7,079 3,344
Total notes issued by
Bank of America Corporation 82,869 61,400
Notes issued by Bank of America, N.A.
and other subsidiariesc1,z�
Senior notes:
Fixed, ranging from 0°h to 8.50°�,
due 2005 to 2073 406 606
Floating, ranging from 0°� to 3.51°�,
due 2005 to 2051 6,090 3,491
Subordinated notes:
Fixed, ranging from 5.75% to 8.63%,
due 2005 to 2009 2,186 300
Floating, 2.56%, due 2019 8 8
Total notes issued by Bank of America, N.A.
and other subsidiaries 8,690 4,405
Notes issued by NB Holdings Corporationa,z�
Junior subordinated notes
(related to trust preferred securities):
Fixed - 515
Floating, ranging from 2.40°� to 3.19%
due 2026 to 2027 773 258
Total notes issued by
NB Holdings Corporation 773 773
Other debt
Advances from the
Federal Home Loan Bank - Georgia 2,750 2,750
Advances from the
Federal Home Loan Bank - Oregon 2,081 5,989
Advances from the
Federal Home Loan Bank - Massachusetts 868 -
Other 47 26
Total other debt 5,746 8,765
Total $ 98,078 $ 75,343
(11 Certain fixetl-rate antl floating-rate classifications as well as interest rates include the effect ot
interest rate swap contracts.
�z� Rates and maturity dates reflect outstanding debt at December 31, 2004.
BANK OF AMERICA 2004 121
��
�
u
•
�
•
The majority of the floating rates are based on three- and six-month
London InterBank Offered Rates (LIBOR). Bank of America
Corporation and Bank of America, N.A. maintain various domestic
and international debt programs to offer both senior and subordi-
nated notes. The notes may be denominated in U.S. dollars or foreign
currencies. Foreign currency contracts are used to convert certain
foreign currency-denominated debt into U.S. doltars.
At December 31, 2004 and 2003, Bank of America Corporation
was authorized to issue approximately $37.1 billion and $26.0 bil-
lion, respectively, of additional corporate debt and other securities
under its existing shelf registration statements. At December 31,
2004 and 2003, Bank of America, N.A. was authorized to issue
approximately $27.2 billion and $25.9 billion, respectively, of bank
notes and Euro medium-term notes.
Including the effects of interest rate contracts for certain long-
term debt issuances, the weighted average effective interest rates for
total long-term debt, total fixed-rate debt and total floating-rate debt
(based on the rates in effect at December 31, 2004) were 3.19 per-
cent, 6.36 percent and 2.67 percent, respectively, at December 31,
2004 and (based on the rates in effect at December 31, 2003) were
2.36 percent, 6.01 percent and 1.41 percent, respectively, at
December 31, 2003. These obligations were denominated primarily
in U.S. dollars.
Aggregate annual maturities of long-term debt obligations
(based on final maturity dates) at December 31, 2004 are as follows:
(oouars in miilions) 2005 2006 2007 2008 2009 Thereafter Total
Bank of America Corporation $ 5,867 $ 8,326 $ 8,286 $ 6,191 $ 8,153 $46,046 $82,869
Bank of America, N.A. 1,760 1,437 1,145 2,429 400 1,519 8,690
NB Holdings Corporation — — — — — 773 773
Other 1,884 2,739 565 104 21 433 5,746
Total $ 9,511 $12,502 $ 9,996 $ 8,724 $ 8,574 $ 48,771 $ 98,078
Trust Preferred Securities
Trust preferred securities (Trust Securities) are issued by the trust
companies (the Trusts) that were deconsolidated by the Corporation
as a result of the adoption of FIN 46. These securities are mandato-
rily redeemable preferred security obligations of the Trusts. The sole
assets of the Trusts are Junior Subordinated Deferrable Interest
Notes of the Corporation (the Notes). The Trusts are 100 percent
owned finance subsidiaries of the Corporation. Obligations associ-
ated with these securities are included in junior subordinated notes
related to Trust Securities in the Long-term Debt table on page 121.
See Note 14 of the Consolidated Financial Statements for a discus-
sion regarding the potential change in treatment for regulatory capi-
tal purposes of the Trust Securities.
At December 31, 2004, the Corporation had 30 Trusts which
have issued Trust Securities to the public. Certain of the Trust
Securities were issued at a discount and may be redeemed prior to
maturity at the option of the Corporation. The Trusts have invested
the proceeds of such Trust Securities in the Notes. Each issue of the
Notes has an interest rate equal to the corresponding Trust
Securities distribution rate. The Corporation has the right to defer
122 BANK OF AMERICA 2004
payment of interest on the Notes at any time, or from time to time,
for a period not exceeding five years provided that no extension
period may extend beyond the stated maturity of the relevant Notes.
During any such extension period, distributions on the Trust
Securities will also be deferred, and the Corporation's ability to pay
dividends on its common and preferred stock will be restricted.
The Trust Securities are subject to mandatory redemption upon
repayment of the related Notes at their stated maturity dates or their
earlier redemption at a redemption price equal to their liquidation
amount plus accrued distributions to the date fixed for redemption
and the premium, if any, paid by the Corporation upon concurrent
repayment of the related Notes.
Periodic cash payments and payments upon liquidation or
redemption with respect to Trust Securities are guaranteed by the
Corporation to the extent of funds held by the Trusts (the Preferred
Securities Guarantee). The Preferred Securities Guarantee, when
taken together with the Corporation's other obligations, including its
obligations under the Notes, will constitute a full and unconditional
guarantee, on a subordinated basis, by the Corporation of payments
due on the Trust Securities.
The following table is a summary of the outstanding Trust Securities and the Notes at December 31, 2004 as originated by Bank of
America Corporation and the predecessor banks.
(D011ars in millions) Aggregate
Issuer
NationsBank
Capital Trust II
Capital Trust III
Capital Trust IV
BankAmerica
Institutional Capital A
Institutional Capital B
Capital II
Capital III
Barnett
Capital I
Capital II
Capital III
Bank of America
Capital Trust I
Capital Trust II
Capital Trust III
Capital Trust IV
Capital Trust V
Fleet
Capital Trust II
Capital Trust V
Capital Trust VI
Capital Trust VII
Capital Trust VIII
Capital Trust IX
BankBoston
Capital Trust I
Capital Trust II
Capital Trust III
Capital Trust IV
Issuance
Date
December 1996
February 1997
April 1997
November 1996
November 1996
December 1996
January 1997
November 1996
December 1996
January 1997
December 2001
January 2002
August 2002
April 2003
November 2004
December 1996
December 1998
June 2000
September 2001
March 2002
July 2003
November 1996
December 1996
June 1997
June 1998
Principal
Amount of
Trust
Securities
$ 365
494
498
Aggregate
Principal
Amount of
the Notes
$ 376
509
513
Stated
Maturity of
the Notes
December 2026
January 2027
Apri1 2027
450 464 December2026
300 309 December2026
450 464 December2026
400 412 January 2027
300 309 December2026
200 206 December2026
250 258 February 2027
575
900
500
375
518
250
250
300
500
534
175
250
250
250
250
593
928
516
387
534
258
258
309
515
551
180
258
258
258
258
December 2031
February 2032
August 2032
May 2033
November 2034
December 2026
December 2028
June 2030
December 2031
March 2032
August 2033
December 2026
December 2026
June 2027
June 2028
Per
Annum
Interest Interest
Rate of Payment
the Notes Dates
7.83% 6/15, 12/15
3-mo. LIBOR 1/15, 4/15,
+55 bps 7/15, 10/15
8.25 4/15, 10/15
8.07
7.70
8.00
3-mo. LIBOR
+57 bps
8.06
7.95
3-mo. LIBOR
+62.5 bps
7.00
7.00
7.00
5.88
6.00
7.92
3-mo. LIBOR
+100 bps
8.80
7.20
7.20
6.00
8.25
7.75
3-mo. LIBOR
+75 bps
3-mo. LIBOR
+60 bps
6/30, 12/31
6/30, 12/31
6/15, 12/15
1/15, 4/15,
7/15,10/15
6/1, 12/1
6/1, 12/1
2/1, 5/1,
8/1, 11/1
3/15, 6/15,
9/15, 12/15
2/1, 5/1,
8/1, 11/1
2/15, 5/15,
8/15,11/15
2/1, 5/1,
8/1, 11/1
2/3, 5/3,
8/3, 11/3
6/15, 12/15
3/18,6/18,
9/18,12/18
3/31, 6/30,
9/30, 12/31
3/15, 6/15,
9/15,12/15
3/15, 6/15,
9/15,12/15
2/1, 5/1,
8/1, 11/1
6/15, 12/15
6/15, 12/15
3/15, 6/15,
9/15,12/15
3/8, 6/8,
9/8,12/8
•
Redemption
Period
On or after
12/15/0611,a)
On or after
1/15/07�1�
On or after
4/15/07(1,4�
On or after
12/31/06�2,5�
On or after
12/31/06�2,6�
On or after
12/15/06«•��
On or after
1/15/02«>
On or after
12/01/06�i�8�
On or after
12/01/O6�l,s�
On or after �
2/01/07�1�
On or after
12/15/06�10�
On or after
2/01/07(11�
On or after
8/15/07�12i
On or after
5/01/08�13�
On or after
11/03/09c14�
On or after
12/15/06«��s7
On or after
12/18/03i2i
On or after
6/30/05�2�
On or after
9/17/06�2�
On or after
3/08/07�z16�
On or after
7/31/08�i�
On or after
12/15/06�2,1>>
On or after
12/15/06�z la�
On or after
6/15/07�2�
On or after
6/08/03�2�
•
BANK OF AMERICA 2004 123
\ J
�
•
(Dollars in millions)
Issuer
Summit
Capital Trust I
Progress
Capital Trust I
Capital Trust II
Capital Trust III
Capital Trust IV
Aggregate
Prindpal Aggregate
Amount of Principal
Issuance Trust Amount of
Date Securities the Notes
March 1997 $ 150 $ 155
June 1997 9 9
July 2000 6 6
November 2002
December 2002
10 10
Total $ 9,764 $10,066
Per
Annum
Stated Interest
Maturity of Rate of
the Notes the Notes
Interest
Payment Redemption
Dates Period
March 2027 8.40% 3/15, 9/15 On or after
3/15/07(z,is�
June 2027 10.50 6/1, 12/1 On or after
6/01/07(z,zo)
July 2030 11.45 1/19, 7/19 On or after
7/19/1012.z1I
November 2032 3-mo. LIBOR 5/15, 11/15 On or after
+33.5 bps 11/15/07cz�
January 2033 3-mo. LIBOR 1/7, 4/7, On or after
+33.5 bps 7/7, 10/7 1/07/08�1�
�11 The Corporation may redeem the Notes prior to the indicated redemption period upon the occurrence of certain events relating to tax treatment of the related Trust or the Notes, relating to capital
treatment of the Trust Securities or relating to a change in the treatment of the related Trust under the Investment Company Act of 1940, as amended, at a redemption price at least equal to the
principal amount of the Notes.
(21 The Corporation may redeem the Notes prior to the indicatetl retlemption periotl upon the occurrence of certain events relating to tax treatment of the relatetl Trust or the Notes or relating to capital
treatment of the Trust Securities at a retlemption price at least equal to the principal amount of the Notes.
131 The Notes may be redeemed on or after December 15, 2006 and prior to December 15, 2007 at 103.915 percent of the principal amount, and thereafter, at prices declining ro S00 percent on
December 15, 2016 and thereafter.
�4) The Notes may be redeemed on or after April 15, 2007 and pnor to Apnl 15, 2008 at 103.85 percent of the pnncipal amount, antl thereafter, at prices tleclining to 100 percent on
April 15, 2017 and thereafter.
(51 The Notes may be retleemed on or after December 31, 2006 and prior to December 31, 2007 at 104.035 percent of the principal amount, and thereafter, at prices declining to 100 percent on
December 31, 2016 and thereafter.
�61 The Notes may be redeemed on or after December 31, 2006 and prior to December 31, 2007 at 103.7785 percent of the principal amount, and thereafter, at prices declining to 100 percent on
December 31, 2016 and thereafter.
(�) The Notes may De redeemed on or after December 15, 2006 and prior to December 15, 2007 at 103.969 percen[ of the principal amount, and thereafter, at prices declining to 100 percent on
December 15, 2016 antl thereafter.
(8) The Notes may be retleemed on or after December 1, 2006 and prior to December 1, 2007 at 104.03 percent of the principal amount, and thereafter, at pnces decliningdo S00 percent on December 1,
2016 and thereafter.
�9� The Notes may be redeemed on or after December 1, 2006 and pnor to December 1, 2007 at 103.975 percent of the pnncipal amount, and thereafter, at pnces declining to 100 percent on December 1,
2016 and thereafter.
�101 The Corporation may redeem the Notes prior to the intlicatetl redemption periotl upon the xcurrence and continuation of a taz event, an investment company event or a capital treatment event.
The Corpordtion may extentl the stated maturiry tlate of the junior subordina[ed notes [o a date no later than December 15, 2050.
(11) The Corporation may redeem the Notes prior to the indicated redemption periotl upon the occurrence and continuation of a taz event, an investment company event or a capital treatment event.
The Corporation may extentl [he statetl maturiry tlate of the junior suDOrtlinated notes to a date no later than February 1, 2051.
�121 The Corpo2tion may redeem the Notes prior to the intlicated retlemption periotl upon the xcurrence and continuation of a taa event, an investment company event or a capital treatment event.
The Corporation may extentl [he stated matunry tlate of the junior suDOrdinated notes [o a date no later than April 15, 2051.
�13� 7he Corporation may retleem [he Notes pnor to the intlica[eU retlemption penotl upon t�e occurrence antl continuation of a tax event, an investment company event or a capital treatment event.
The Corporation may extend the stated matunty tlate of the Junior subordinated notes to a date no later than May 3, 2052.
�14� The Corporation may redeem the Notes prior to the indicated redemption penod upon the ocarrence and continuation of a tax event, an investment company event or a capital treatment event.
The Corporation may extentl t�e statetl maturiry tlate of the junior subortlinatetl no[es to a tlate no later than November 3, 2053.
(15) The Notes may be retleemetl on or after December 15, 2006 and D�or to December 15, 2007 at 103.908 percent of the principal amount, and thereafter, a[ pnces declining to 100 percent on
December 15, 2016 and thereafter.
(1s) The Corporation may extend the stated maturiTy date of the junior subordinated notes to a date no later than March 15, 2051.
�1�1 The Notes may be redeemetl on or after December 15, 2006 and prior to December 15, 2007 at 104.125 percent of the principal amount, and thereafter, at pnces declining to 100 percent on
DecemDer 15, 2016 and thereafter.
�18� The Notes may be redeemed on or after December 15, 2006 antl prior to December 15, 2007 at 103.875 percent of the principal amount, and thereafter, at pnces declining to 100 percent on
December 15, 2016 and thereafter.
�191 The Notes may be redeemetl on or aker March 15, 2007 and pnor to March 15, 2008 at 104.20 percent of the pnncipal amount, and thereafter, at prices declining to 100 percent on March 15, 2017
and thereafter.
�20� The Notes may be redeemetl on or after June 1, 2007 and pnor to June 1, 2008 at 105.25 percent of Ihe pnncipal amount, anU Mereafter, at prices declining to 100 percent on June 1, 2017
and thereafter.
�zl� The Notes may be redeemetl on or after July 19, 2010 antl pnor to July 19, 2011 at 102.861 percent of the pnncipal amoun[, and thereafter, at Drices declining to 100 percent on Juty 19, 2015
and thereafter.
Note 12 Commitments and Contingencies
In the normal course of business, the Corporation enters into a num-
ber of off-balance sheet commitments. These commitments expose
the Corporation to varying degrees of credit and market risk and are
subject to the same credit and market risk limitation reviews as
those recorded on the Corporation's Consolidated Balance Sheet.
124 BANK OF AMERICA 2004
Credit Extension Commitments
The Corporation enters into commitments to extend credit such as loan
commitments, standby letters of credit (SBLCs) and commercial letters
of credit to meet the financing needs of its customers. The outstand-
ing unfunded lending commitments shown in the following table have
been reduced by amounts participated to other financial institutions of
$23.4 billion and $12.5 billion at December 31, 2004 and 2003,
respectively. The carrying amount for these commitments, which repre-
sents the liability recorded related to these instruments, at December
31, 2004 and 2003 was $520 million and $418 million, respectively.
December 31 FleetBoston
(ooi�ars in mi��ions) 2004 2003 April 1, 2004
Loan commitments�1� $247,094 $180,078 $ 61,012
Home equity lines of credit 60,128 31,703 13,891
Standby letters of credit and
financial guarantees 42,850 31,150 12,914
Commercial letters of credit 5,653 3,260 1,689
Legally binding commitments 355,725 246,191 89,506
Credit card lines 185,461 93,771 77,997
Total $541,186 $339,962 $167,503
�l� Equiry commitments of $2,052 and $1,678 relatetl to obligations to fund existing equity
investments were inclutletl in loan commitments at December 31, 2004 and 2003, respectively.
Included in loan commitments at December 31, 2004, were $838 of equity commitments
relatetl to obligations to fund existing equiry investments acquired from FleetBOSton.
Legally binding commitments to extend credit generally have speci-
fied rates and maturities. Certain of these commitments have
adverse change clauses that help to protect the Corporation against
deterioration in the borrowers' ability to pay.
The Corporation issues SBLCs and financial guarantees to sup-
port the obligations of its customers to beneficiaries. Additionally, in
many cases, the Corporation holds collateral in various forms against
these SBLCs. As part of its risk management activities, the
Corporation continuously monitors the creditworthiness of the cus-
tomer as well as SBLC exposure; however, if the customer fails to per-
form the specified obligation to the beneficiary, the beneficiary may
draw upon the SBLC by presenting documents that are in compliance
with the letter of credit terms. In that event, the Corporation either
repays the money borrowed or advanced, makes payment on account
of the indebtedness of the customer or makes payment on account
of the default by the customer in the performance of an obligation to
the beneficiary up to the full notional amount of the SBLC. The cus-
tomer is obligated to reimburse the Corporation for any such pay-
ment. If the customer fails to pay, the Corporation would, as
contractually permitted, liquidate collateral and/or set off accounts.
Commercial letters of credit, issued primarily to facilitate cus-
tomer trade finance activities, are usually collateralized by the under-
lying goods being shipped to the customer and are generally
short-term. Credit card lines are unsecured commitments that are not
legally binding. Management reviews credit card lines at least annu-
ally, and upon evaluation of the customers' creditworthiness, the
Corporation has the right to terminate or change certain terms of the
credit card lines.
The Corporation uses various techniques to manage risk
associated with these types of instruments that include collateral
and/or adjusting commitment amounts based on the borrower's
financial condition; therefore, the total commitment amount
does not necessarily represent the actual risk of loss or future
cash requirements. For each of these types of instruments, the
Corporation's exposure to credit loss is represented by the
contractual amount of these instruments.
Other Commitments
At December 31, 2004 and 2003, charge cards (nonrevolving card
lines) to individuals and government entities guaranteed by the U.S.
government in the amount of $10.9 billion and $13.7 billion, respec-
tively, were not included in credit card line commitments in the previ-
ous table. The outstandings related to these charge cards were $205
million and $233 million, respectively.
At December 31, 2004, the Corporation had whole mortgage
loan purchase commitments of $3.3 billion, of which $2.9 billion will
settle in January 2005, and $430 million will settle in February 2005.
At December 31, 2003, the Corporation had whole mortgage loan
purchase commitments of $4.6 billion, all of which were settled in
January and February 2004. At December 31, 2004 and 2003, the
Corporation had no fonvard whole mortgage loan sale commitments.
The Corporation has entered into operating leases for certain of
its premises and equipment. Commitments under these leases
approximate $1.4 billion in 2005, $1.1 billion in 2006, $995 million
in 2007, $854 million in 2008, $689 million in 2009 and $3.4 bil-
lion for all years thereafter.
Other Guarantees
The Corporation sells products that offer book value protection pri-
marily to plan sponsors of Employee Retirement Income Security Act
of 1974 (ERISA)-governed pension plans such as 401(k) plans, 457
plans, etc. The book value protection is provided on portfolios of
intermediate/short-term investment grade fixed income securities
and is intended to cover any shortfall in the event that plan partici-
pants withdraw funds when market value is below book value. The
Corporation retains the option to exit the contract at any time. If the
Corporation exercises its option, the purchaser can require the
Corporation to purchase zero coupon bonds with the proceeds of the
liquidated assets to assure the return of principal. To hedge its expo-
sure, the Corporation imposes significant restrictions and constraints
on the timing of the withdrawals, the manner in which the portfolio is
liquidated and the funds are accessed, and the investment parame-
ters of the underlying portfolio. These constraints, combined with
structural protections, are designed to provide adequate buffers and
guard against payments even under extreme stress scenarios. These
guarantees are booked as derivatives and marked to market in the
trading portfolio. At December 31, 2004 and 2003, the notional
amount of these guarantees totaled $26.3 billion and $24.9 billion,
respectively, with estimated maturity dates between 2006 and 2034.
As of December 31, 2004 and 2003, the Corporation has not made
a payment under these products, and management believes that the
probability of payments under these guarantees is remote.
The Corporation also sells products that guarantee the return of
principal to investors at a preset future date. These guarantees cover
a broad range of underlying asset classes and are designed to cover
the shortfall between the market value of the underlying portfolio and
the principal amount on the preset future date. To manage its expo-
sure, the Corporation requires that these guarantees be backed by
structural and investment constraints and certain pre-defined triggers
that would require the underlying assets or portfolio to be liquidated
BANK OF AMERICA 2004 125
•
.�
•
•
�
�
and invested in zero-coupon bonds that mature at the preset future
date. The Corporation is required to fund any shortfall at the preset
future date between the proceeds of the liquidated assets and the
purchase price of the zero-coupon bonds. These guarantees are
booked as derivatives and marked to market in the trading portfolio.
At December 31, 2004 and 2003, the notional amount of these guar-
antees totaled $8.1 billion and $6.7 billion, respectively; however, at
December 31, 2004 and 2003, the Corporation had not made a pay-
ment under these products, and management believes that the prob-
ability of payments under these guarantees is remote. These
guarantees have various maturities ranging from 2006 to 2016.
The Corporation has also written puts on highly rated fixed income
securities. Its obligation under these agreements is to buy back the
assets at predetermined contractual yields in the event of a severe mar-
ket disruption in the short-term funding market. These agreements have
various maturities ranging from two to seven years, and the pre-deter-
mined yields are based on the quality of the assets and the structural
elements pertaining to the market disruption. The notional amount of
these put options was $653 million and $666 million at December 31,
2004 and 2003, respectively. Due to the high quality of the assets and
various structural protections, management believes that the probability
of incurring a loss under these agreements is remote.
In the ordinary course of business, the Corporation enters into
various agreements that contain indemnifications, such as tax indem-
nifications, whereupon payment may become due if certain external
events occur, such as a change in tax law. These agreements typically
contain an early termination clause that permits the Corporation to
exit the agreement upon these events. The maximum potential future
payment under indemnification agreements is difficult to assess for
several reasons, including the inability to predict future changes in
tax and other laws, the difficulty in determining how such laws would
apply to parties in contracts, the absence of exposure limits con-
tained in standard contract language and the timing of the early ter-
mination clause. Historically, any payments made under these
guarantees have been de minimis. Management has assessed the
probability of making such payments in the future as remote.
The Corporation has entered into additional guarantee agree-
ments, including lease end obligation agreements, partial credit guar-
antees on certain leases, real estate joint venture guarantees, sold risk
participation swaps and sold put options that require gross settlement.
The maximum potential future payment under these agreements was
approximately $2.1 billion and $1.3 billion at December 31, 2004 and
2003, respectively. The estimated maturity dates of these obligations
are between 2005 and 2033. At December 31, 2004 and 2003, the
Corporation had made no material payments under these products.
The Corporation provides credit and debit card processing serv-
ices to various merchants, processing credit and debit card transac-
tions on their behalf. In connection with these services, a liability may
arise in the event of a billing dispute between the merchant and a
cardholder that is ultimately resolved in the cardholder's favor and
the merchant defaults upon its obligation to reimburse the card-
holder. A cardholder, through its issuing bank, generally has until the
later of up to four months after the date a transaction is processed
or the delivery of the product or service to present a chargeback to
the Corporation as the merchant processor. If the Corporation is
126 BANK OF AMERICA 2004
unable to collect this amount from the merchant, it bears the loss
for the amount paid to the cardholder. In 2004 and 2003, the
Corporation processed $143.1 billion and $71.8 billion, respectively,
of transactions and recorded losses as a result of these chargebacks
of $6 million in both years.
At December 31, 2004 and 2003, the Corporation held as col-
lateral approximately $203 million and $182 million, respectively, of
merchant escrow deposits which the Corporation has the right to set
off against amounts due from the individual merchants. The
Corporation also has the right to offset any payments with cash flows
otherwise due to the merchant. Accordingly, the Corporation believes
that the maximum potential exposure is not representative of the
actual potential loss exposure. Management believes the maximum
potential exposure for chargebacks would not exceed the total amount
of inerchant transactions processed through Visa and MasterCard for
the last four months, which represents the claim period for the card-
holder, plus any outstanding delayed-delivery transactions. As of
December 31, 2004 and 2003, the maximum potential exposure
totaled approximately $93.4 billion and $25.0 billion, respectively.
Within the Corporation's brokerage business, the Corporation
has contracted with third parties to provide clearing services that
include underwriting margin loans to the Corporation's clients. These
contracts stipulate that the Corporation will indemnify the third par-
ties for any margin loan losses that occur in their issuing margin to
the Corporation's clients. The maximum potential future payment
under these indemnifications was $1.2 billion and $486 million at
December 31, 2004 and 2003, respectively. Historically, any pay-
ments made under these indemnifications have not been material.
As these margin loans are highly collateralized by the securities held
by the brokerage clients, the Corporation has assessed the probabil-
ity of making such payments in the future as remote. These indem-
nifications would end with the termination of the clearing contracts.
For additional information on recourse obligations related to res-
idential mortgage loans sold and other guarantees related to securi-
tizations, see Note 8 of the Consolidated Financial Statements.
Litigation and Regulatory Matters
In the ordinary course of business, the Corporation and its subsidiaries
are routinely defendants in or parties to many pending and threatened
legal actions and proceedings, including actions brought on behalf of
various classes of claimants. In certain of these actions and proceed-
ings, claims for substantial monetary damages are asserted against
the Corporation and its subsidiaries, and certain of these actions and
proceedings are based on alleged violations of consumer protection,
securities, environmental, banking, employment and other laws.
In view of the inherent di�culty of predicting the outcome of such
matters, particularly where the claimants seek very large or indeter-
minate damages or where the cases present novel legal theories or
involve a large number of parties, the Corporation cannot state with
confidence what the eventual outcome of the pending matters will be,
what the timing of the ultimate resolution of these matters will be or
what the eventual loss, fines or penalties related to each pending
matter may be. Based on current knowledge, management does not
believe that liabilities, if any, arising from pending litigation or regula-
tory matters, including the litigation and regulatory matters described
below, will have a material adverse effect on the consolidated finan-
cial position or liquidity of the Corporation, but may be material to the
Corporation's operating results for any particular reporting period.
Adelphia Communications Corporation (Adelphia)
Bank of America, N.A. and Banc of America Securities LLC (BAS) are
defendants, among other defendants, in a putative class action and
other civil actions relating to Adelphia. The first of these actions was
filed in June 2002; these actions have been consolidated for pre-trial
purposes in the U.S. District Court for the Southern District of New
York. BAS was a member of seven underwriting syndicates of securi-
ties issued by Adelphia, and Bank of America, N.A. was an agent
and/or lender in connection with five credit facilities in which
Adelphia subsidiaries were borrowers. Fleet National Bank and Fleet
Securities, Inc. (FSI) are also named as defendants in certain of the
actions. FSI was a member of three underwriting syndicates of secu-
rities issued by Adelphia, and Fleet National Bank was a lender in
connection with four credit facilities in which Adelphia subsidiaries
were borrowers. The complaints allege claims under the Securities
Act of 1933, the Securities Exchange Act of 1934 and various state
law theories. The complaints seek damages of unspecified amounts.
Bank of America, N.A., BAS, Fleet National Bank and FSI have moved
to dismiss all claims asserted against them, with the exception of
certain claims brought under Sections 11 and 12 of the Securities
Act of 1933. That motion is pending.
Bank of America, N.A., BAS, Fleet National Bank and FSI are also
defendants in an adversary proceeding pending in the U.S. Bankruptcy
Court for the Southern District of New York. The proceeding is brought
by the Official Committee of Unsecured Creditors on behalf of Adelphia;
however, the bankruptcy court has not yet given the Creditors'
Committee authority to bring this lawsuit. The lawsuit names over 400
defendants and asserts over 50 claims under federal statutes, includ-
ing the Bank Holding Company Act, state common law and various
provisions of the Bankruptcy Code. The Creditors' Committee seeks
avoidance and recovery of payments, equitable subordination, dis-
allowance and recharacterization of claims and recovery of damages
in an unspecified amount. The Official Committee of Equity Security
Holders has filed a motion seeking to intervene in the adversary
proceeding and to file its own complaint. The proposed complaint is
similar to the Creditors' Committee complaint, and also asserts
claims under RICO and additional state law theories. Bank of America,
N.A., BAS and FSI have filed objections to the standing of the
Creditors' and Equity Committees to bring such claims, and have also
fifed motions to dismiss. Those motions are pending.
American Express
On November 15, 2004, American Express Travel Related Services
Company (American Express) brought suit in the U.S. District Court for
the Southern District of New York against the Visa and MasterCard
associations, as well as several banks, including Bank of America,
N.A. (USA) and the Corporation. American Express alleges that it has
incurred damages in an unspecified amount by reason of certain
MasterCard and Visa rules that allegedly restricted their member
banks from issuing American Express-branded debit and credit cards.
Motions to dismiss are pending. Enforcement of the MasterCard and
Visa rules was enjoined by the court in United States v. Visa USA, et al.,
in which none of the Corporation or its subsidiaries was a defendant.
Argentine Re-Dollarization
In December 2001, the Argentine Government issued a decree
imposing limitations on the ability of FleetBoston bank customers in
Argentina to withdraw funds from their accounts in Argentine banks
(the corralito). Since the corralito was issued, a large number of cus-
tomers of the FleetBoston Argentine operations (BankBoston
Argentina) have filed complaints in a number of Argentine federal and
provincial courts against Bank6oston Argentina seeking to invalidate
the corralito on constitutional grounds and withdraw their funds.
Since 2002, Argentine courts have ordered many of these deposits
to be paid out at original dollar value.
Enron Corporation (Enron)
The Corporation was named as a defendant, along with a number
of other parties, in a putative consolidated class action pending in
the U.S. District Court for the Southern District of Texas filed on
April 8, 2002 entitled Newby v. Enron. The amended complaint
alleges claims against the Corporation and BAS under Sections 11,
12 and 15 of the Securities Act of 1933 related to the role of BAS
as an underwriter of two public offerings of Enron debt and as an
initial purchaser in a private placement of debt issued by an Enron-
affiliated company.
On July 2, 2004, the Corporation reached an agreement to
settle the above litigation. Under the terms of the settlement, which
is subject to court approval, the Corporation will make a payment
of approximately $69 million to the settlement class in Newby v.
Enron. The class consists of all persons who purchased or other-
wise acquired securities issued by Enron during the period from
October 19, 1998 to November 27, 2001. On January 18, 2005,
the lead plaintiff filed a motion seeking preliminary approval of the
settlement, and on February 4, 2005, the court granted preliminary
approval of the settlement and set a hearing date of April 11, 2005
for final approval.
In addition, the Corporation and certain of its affiliates have
been named as defendants or third-party defendants in various indi-
vidual and putative class actions relating to Enron. These actions
were either filed in or have been transferred to the U.S. District Court
of the Southern District of Texas and consolidated or coordinated with
Newby v. Enron. The complaints assert claims under federal securi-
ties laws, state securities laws and/or state common law or statutes,
or for contribution. In nine cases, piaintiffs seek damages or contri-
bution for damages ranging from at least $15,000 to $472 million
from all defendants, including financial institutions, accounting firms,
law firms and numerous individuals. In the remaining cases, the
plaintiffs seek damages in unspecified amounts.
Fleet Specialist
On March 30, 2004, Fleet Specialist and certain other specialist
firms entered into agreements with the SEC and the New York Stock
Exchange (the NYSE) to settle charges that the firms violated certain
federal securities laws and NYSE rules in the course of their spe-
cialist trading activity. The settlement, which involves no admission
BANK OF AMERICA 2004 127
•
_•
•
•
�
.
or denial of wrongdoing, includes disgorgement and civil penalties
for Fleet Specialist totaling approximately $59.1 million, a censure,
cease and desist order, and certain undertakings, including the
retention of an independent consultant to review compliance sys-
tems, policies and procedures. Separately, putative class action
complaints seeking unspecified damages have been filed in the U.S.
District Court for the Southern District of New York against Fleet
Specialist, FleetBoston, the Corporation, and other specialist firms
(and their parent companies) on behalf of investors who traded
stock on the NYSE between 1998 and 2003, and were allegedly dis-
advantaged by the improper practices of the specialist firms. These
federal court actions have been consolidated. A multi-defendant
motion to dismiss has been filed. The settlement with the SEC and
NYSE does not resolve the putative class actions, although a portion
of the payment is expected to be allocated to restitution for allegedly
disadvantaged customers.
Foreign Currency
Bank of America, N.A. (USA) and the Corporation, together with Visa
and MasterCard associations and several other banks, are defendants
in a consolidated class action lawsuit pending in U.S. District Court for
the Southern District of New York entitled In re Currency Conversion
Fee Antitrust Litigation. The plaintiff cardholders allege that Visa and
MasterCard, together with their member banks, conspired to set the
price of foreign currency conversion services on credit card transac-
tions and that each bank failed to disclose the applicable price in com-
pliance with the Truth in Lending Act resulting in damages to the class
of an unspecified amount. By decision dated July 3, 2003, the court
granted the motion of the Corporation and Bank of America, N.A. (USA)
to compel arbitration of the claims asserted by Bank of America, N.A.
(USA) cardholders. However, the court denied a motion brought by all
defendants to dismiss the antitrust claims, so Bank of America, N.A.
(USA) and the Corporation remain as defendants with respect to
antitrust claims alleged on behalf of certain co-defendants' card-
holders. By order dated October 15, 2004, the court granted plaintiffs'
motion to certify a class of cardholders of the defendant banks who
used MasterCard or Visa-branded credit cards for one or more trans-
actions denominated in foreign currency.
In re Initial Public Offering Securities
Beginning in 2001, Robertson Stephens, Inc. (an investment banking
subsidiary of FleetBoston that ceased operations during 2002), BAS,
other underwriters, and various issuers and others, were named as
defendants in purported class action lawsuits alleging violations of
federal securities laws in connection with the underwriting of initial
public offerings (IPOs) and seeking unspecified damages. Robertson
Stephens, Inc. and BAS were named in certain of the 309 purported
class actions that have been consolidated in the U.S. District Court for
the Southern District of New York as In re Initial Public Offering
Securities Litig. The plaintiffs contend that the defendants failed to
make certain required disclosures, manipulated prices of IPO securi-
ties through, among other things, alleged agreements with institutional
investors receiving allocations to purchase additional shares in the
aftermarket, and false and misleading analyst reports. On October 13,
2004, the court granted in part and denied in part plaintiffs' motions
128 BANK OF AMERICA 2004
to certify as class actions six of 309 cases filed. The underwriter
defendants are currently seeking a discretionary appeal of that
decision in the U.S. Court of Appeals for the Second Circuit. Discovery
is proceeding in the underlying actions.
In addition, the plaintiffs have reached a settlement with 298 of
the issuer defendants in which the issuer defendants guaranteed
that the plaintiffs will receive at least $1 billion in the settled actions
and assigned to the plaintiffs the issuers' interest in all claims
against the underwriters for "excess compensation." On February 15,
2005, the court conditionally approved the settlement, with a fair-
ness hearing still to be scheduled. The plaintiffs have not reached a
settlement with any of the underwriter defendants, including
Robertson Stephens,lnc.and BAS.
Robertson Stephens, Inc. and other underwriters also have
been named as defendants in class action lawsuits filed in the U.S.
District Court for the Southern District of New York under the
antitrust laws alleging that the underwriters conspired to manipulate
the aftermarkets for IPO securities and to extract anticompetitive
fees in connection with IPOs. Those antitrust lawsuits have been
dismissed. Plaintiffs have appealed that decision to the Court of
Appeals for the Second Circuit.
Miller
On August 13, 1998, Bank of America, N.A.'s predecessor was
named as a defendant in a class action flled in Superior Court of
California, County of San Francisco entitled Paul J. Miller v. Bank of
America, N.A. challenging its practice of debiting accounts that
received, by direct deposit, governmental benefits to repay fees
incurred in those accounts. The action alleges fraud, negligent mis-
representation and violations of certain California laws. On October
16, 2001, a class was certified consisting of more than one million
California residents who have, had or will have, at any time after
August 13, 1994, a deposit account with Bank of America, N.A. into
which payments of public benefits are or have been directly deposited
by the government. The case proceeded to trial on January 20, 2004.
On February 15, 2004, the jury found that Bank of America, N.A.
violated certain California laws and imposed damages of approxi-
mately $75 million and awarded the class representative $275,000
in emotional distress damages. The jury also assessed a$1,000
penalty as to those members of the class suffering substantial eco-
nomic or emotional harm as a result of the practice but did not deter-
mine which or how many class members are entitled to the penalty.
On December 30, 2004, the trial court issued a final ruling on
claims tried to the court at the conclusion of the February 2004 jury
trial. The ruling awards the plaintiff class restitution in the amount of
$284 million, plus attorneys' fees. The ruling also concludes that any
class members whose account was wrongfully debited and suffered
substantial emotional or economic harm is entitled to an additional
$1,000 penalty, but did not determine which or how many class
members are entitled to the penalty, and includes injunctive relief,
which is temporarily stayed.
Once the jury verdict and final decision are entered as a
judgment, Bank of America, N.A. will appeal to the California Court
of Appea�, First Appellate District and move to stay the injunction
pending appeai.
Mutual Fund Operations Matters
On March 15, 2004, the Corporation announced agreements in prin-
ciple with the New York Attorney General (the NYAG) and the SEC to
settle matters related to late trading and market timing of mutual
funds. The Corporation agreed, without admitting or denying wrong-
doing, to (1) pay $250 million in disgorgement and $125 million in
civil penalties; (2) the issuance of an order against three subsidiaries
of the Corporation, Banc of America Capital Management, LLC
(BACAP), BACAP Distributors, LLC (BACAP Distributors), and BAS to
cease and desist from violations of the federal securities laws, as
well as the implementation of enhanced governance and compliance
procedures; (3) retain an independent consultant to review BACAP's,
BACAP Distributor's and BAS applicable compliance, control and
other policies and procedures; and (4) exit the unaffiliated introduc-
ing broker/dealer clearing business. In addition, the agreement with
the NYAG provides for reduction of mutual fund management fees of
the Nations Funds by $80 million over five years. These settlements
were finalized with the NYAG and the SEC on February 9, 2005.
On February 24, 2004, the SEC filed a civil action in the U.S.
District Court for the District of Massachusetts against two
FleetBoston subsidiaries, Columbia Management Advisors, Inc. and
Columbia Funds Distributor, Inc. (the Columbia Subsidiaries), alleging
that the Columbia Subsidiaries allowed certain customers to engage
in short-term or excessive trading without disclosing this fact in the
relevant fund prospectuses. The complaint alleged violations of fed-
eral securities laws in relation to at least nine trading arrangements
pertaining to these customers during the period 1998-2003, and
requested injunctive and monetary relief. A similar action was filed
the same day in a state court in New York by the NYAG, claiming relief
under New York state statutes. On March 15, 2004, FleetBoston and
its subsidiaries announced agreements in principle with the NYAG
and the SEC, agreeing, without admitting or denying wrongdoing, to
(1) pay $70 million in disgorgement and $70 million in civil penalties;
(2) the issuance of an order requiring the Columbia Subsidiaries to
cease and desist from violations of the federal securities laws, as
well as the implementation of enhanced governance and compliance
procedures; and (3) retain an independent consultant to review the
Columbia Subsidiaries' applicable compliance, control and other poli-
cies and procedures. In addition, the agreement with the NYAG pro-
vides for reduction of mutual fund management fees of the Columbia
funds by $80 million over five years. These settlements were finalized
with the NYAG and the SEC on February 9, 2005.
On February 9, 2005, the Corporation entered an agreement
with the Federal Reserve Bank of Richmond, and Bank of America,
N.A. entered an agreement with the O�ce of the Comptroller of the
Currency (OCC). Under the agreements, the Corporation and Bank of
America, N.A. agreed to continue with existing plans to implement
remedial actions. The federal banking regulators did not impose any
monetary penalties or fines under the agreements.
The Corporation is continuing to respond to inquiries from fed-
eral and state regulatory and law enforcement agencies concerning
mutual fund related matters.
Private lawsuits seeking unspecified damages concerning
mutual fund trading against the Corporation and its pre-FleetBoston-
merger subsidiaries include putative class actions purportedly
brought on behalf of shareholders in Nations Funds mutual funds,
derivative actions brought on behalf of one or more Nations Funds
mutual funds by Nations Funds shareholders, putative ERISA class
actions brought on behalf of participants in the Corporation's 401(k)
plan, derivative actions brought against the Corporation's directors on
behalf of the Corporation by shareholders in the Corporation, class
actions and derivative actions brought by shareholders in third-party
mutual funds alleging that the Corporation or its subsidiaries facili-
tated improper trading in those funds, and a private attorney general
action brought under California law. The lawsuits filed to date with
respect to FleetBoston and its subsidiaries include putative class
actions purportedly brought on behalf of shareholders in Columbia
mutual funds, derivative actions brought on behalf of one or more
Columbia mutual funds or trusts by Columbia mutual fund share-
holders, and an individual shareholder action.
On February 20, 2004, the Judicial Panel on Multidistrict
Litigation (MDL Panel) ordered that all lawsuits pending in federal
court with respect to alleged late trading or market timing in mutual
funds be transferred to the U.S. District Court for the District of
Maryland for coordinated pretrial proceedings. The private lawsuits
have been transferred to the court with the exception of one case
that was remanded to a state court in Illinois and two cases where
motions to remand to state court remain pending. On September 29,
2004, plaintiffs filed consolidated amended complaints in the U.S.
District Court for the District of Maryland. Motions to dismiss the con-
solidated amended complaints are to be filed on February 25, 2005.
Parmalat Finanziaria S.p.A.
On December 24, 2003, Parmalat Finanziaria S.p.A. was admitted
into insolvency proceedings in Italy, known as "extraordinary admin-
istration." The Corporation, through certain of its subsidiaries, includ-
ing Bank of America, N.A., provided financial services and extended
credit to Parmalat and its related entities. On June 21, 2004,
Extraordinary Commissioner Dr. Enrico Bondi filed with the Italian
Ministry of Production Activities a plan of reorganization for the
restructuring of the companies of the Parmalat group that are
included in the Italian extraordinary administration proceeding.
In July 2004, the Italian Ministry of Production Activities
approved a restructuring plan, as amended, for the Parmalat group
companies that are included in the Italian extraordinary administra-
tion proceeding. This plan will be voted on by creditors whose claims
the Court of Parma recognizes as valid. Voting is expected to take
place by June 30, 2005. In August 2004, the Extraordinary
Commissioner filed objections to certain claims with the Court of
Parma, Italy. In that filing, the Extraordinary Commissioner rejected all
the Corporation's claims on various grounds. On September 18,
2004, the Corporation filed its responses to the filing with the Court
of Parma and on December 16, 2004, the court admitted and
accepted the majority of the Corporation's claims. The Corporation
will appeal the courYs decision regarding the portion of its claims
which were not admitted.
BANK OF AMERICA 2004 129
•
�
•
�
L_J
u
On lanuary 8, 2004, The Public Prosecutor's O�ce for the Court
of Milan, Italy identified Luca Sala, a former employee, as a subject
of its investigation into the Parmalat matter. On March 2, 2004, the
Public Prosecutor further advised the Corporation that the activities
of the Corporation and two additional employees in Milan, Italy, Luis
Moncada and Antonio Luzi, were also under investigation. These
employees concurrently submitted letters of resignation.
On May 26, 2004, the Public Prosecutor's Office filed criminal
charges against the Corporation's former employees, Antonio Luzi, Luis
Moncada, and Luca Sala, alleging market manipulation in connection
with Parmalat. The Public Prosecutor's Office also filed a related charge
against the Corporation asserting administrative liability based on an
alleged failure to maintain an organizational model sufficient to prevent
the alleged criminal activities of its former employees.
Preliminary hearings regarding the administrative charge
against the Corporation and the criminal charges against the former
employees have been held in the Court of Milan, Italy, the first of
which took place on October 5, 2004. At this and subsequent hear-
ings, a number of persons filed requests to participate in the pro-
ceedings as damaged civil parties under Italian law. Various
preliminary hearings and pre-trial proceedings are on-going.
On March 5, 2004, a First Amended Complaint was filed in a
putative securities class action pending in the U.S. District Court for
the Southern District of New York entitled Southern Alaska Carpenters
Pension Fund et al. v. Bonlat Financing Corporation et al., which names
the Corporation as a defendant. The First Amended Complaint
alleges causes of action against the Corporation for violations of the
federal securities laws based upon the Corporation's alleged role in
the alleged Parmalat accounting fraud. This action was consolidated
with several other class actions filed against multiple defendants,
and on October 18, 2004, an Amended Consolidated Complaint was
filed. Unspecified damages are being sought. The Corporation filed a
motion to dismiss the Amended Consolidated Complaint. The motion
to dismiss is pending.
On October 7, 2004, Enrico Bondi filed an action in the U.S.
District Court for the Western District of North Carolina against the
Corporation and various related entities, entitled Dr. Enrico Bondi,
Extraordinary Commissioner of Parmalat Finanziaria, S.p.A., et al v.
Bank of America Corporation, et al (the Bondi Action). The complaint
alleges federal and state RICO claims and various state law claims,
including fraud. The plaintiff seeks $10 billion in damages. A motion
to dismiss is pending.
The Corporation has requested that the MDL Panel consolidate
and/or coordinate pre-trial proceedings in the Bondi Action with other
lawsuits filed by Enrico Bondi against non-Bank of America defen-
dants. On December 14, 2004, the Corporation requested that the
Bondi Action be transferred to the federal court in New York for pre-
trial purposes. That request is pending before the MDL Panel.
Pension Plan Matters
The Corporation is a defendant in a putative class action, entitled
Anita Pothier, et al. v. Bank of America Corp., et al., which was filed
in June 2004 in the U.S. District Court for the Southern District of
Illinois. The action is brought on behalf of all participants in or ben-
eficiaries of any cash balance defined benefit plan maintained by
130 BANK OF AMERICA 2004
the Corporation or its predecessors. The complaint names as
defendants the Corporation, Bank of America, N.A., The Bank of
America Pension Plan (formerly known as the NationsBank Cash
Balance Plan) and its predecessor plans, The Bank of America
401(k) Plan (formerly known as the NationsBank 401(k) Plan) and
its predecessor plans, the Bank of America Corporation Corporate
Benefits Committee and various members thereof, various current
and former directors of the Corporation and certain of its prede-
cessors, and PricewaterhouseCoopers LLP. The named plaintiffs are
alleged to be current or former participants in one or more
employee benefit pension plans sponsored or participated in by the
Corporation orits predecessors.
The complaint alleges the defendants violated various provi-
sions of ERISA, including that the cash balance formula of The Bank
of America Pension Plan and a predecessor plan, the BankAmerica
Pension Plan, violated ERISA's defined benefit pension plan stan-
dards. In addition, the complaint alleges age discrimination in the
design and operation of the cash balance plans at issue, improper
benefit to the Corporation and its predecessors, interference with the
attainment of pension rights, and various prohibited transactions and
fiduciary breaches. The complaint further alleges that certain volun-
tary transfers of assets by participants in The Bank of America
401(k) Plan and certain predecessor plans to The Bank of America
Pension Plan violated ERISA.
The complaint alleges that the participants in these plans are
entitled to greater benefits and seeks declaratory relief, monetary relief
in an unspecified amount, equitable relief, including an order reforming
The Bank of America Pension Plan, attorneys' fees and interest.
On February 9, 2005, the defendants in the Pothier action
moved to transfer the venue of the Pothier action to the U.S. District
Court for the Western District of North Carolina and to dismiss the
complaint. These motions are pending. On February 8, 2005, plain-
tiffs informed the court that they intend to file a motion for partial
summary judgment with respect to their claim relating to the calcula-
tion of lump sum benefits under the NationsBank Cash Balance Plan
and/or The Bank of America Pension Pian. On February 18, 2005,
one of the named plaintiffs moved to certify a class with respect to
that claim. The motion for class certification is pending.
The IRS is conducting an audit of the 1998 and 1999 tax returns
of The Bank of America Pension Plan and The Bank of America 401(k)
Plan. This audit includes a review of voluntary transfers by participants
of 401(k) plan assets to The Bank of America Pension Plan and
whether such transfers were in accordance with applicable law. By let-
ter dated December 10, 2004, the IRS advised the Corporation that
the IRS has tentatively concluded that the voluntary transfers of par-
ticipant accounts from The Bank of America 401(k) Plan to The Bank
of America Pension Plan violated the anti-cutback rule of Section
411(d)(6) of the Internal Revenue Code. The Corporation is entitled to
a conference of right to discuss this tentative conclusion before the
IRS reaches a final decision, and the Corporation intends to exercise
this right. The Corporation believes that it could be approximately one
to two years before these IRS audit issues are resolved.
On September 29, 2004, a separate putative class action,
entitled Donna C. Richards vs. FleetBoston Financial Corp, and the
FleetBoston Financial Pension Plan (Fleet Pension Plan), was filed
in the U.S. District Court for the District of Connecticut on behalf
of any and all persons who are former or current Fleet employees
who on December 31, 1996, were not at least age 50 with 15
years of vesting service and who participated in the Fleet Pension
Plan before January 1, 1997, and who have participated in the
Fleet Pension Plan at any time since January 1, 1997.
The complaint alleges that FleetBoston or its predecessor vio-
lated ERISA by amending the Fleet Financial Group, Inc. Pension Plan
(a predecessor to the Fleet Pension Plan) to add a cash balance ben-
efit formula without notifying participants that the amendment signif-
icantly reduced their plan benefits, by conditioning the amount of
benefits payable under the Fleet Pension Plan upon the form of ben-
efit elected, by reducing the rate of benefit accruals on account of
age, and by failing to inform participants of the correct amount of
their pensions and related claims. The complaint also alleges that
the Fleet Pension Plan violates the "anti-backloading" rule of ERISA.
The complaint seeks equitable and remedial relief, including
a declaration that the cash balance amendment to the Fleet Pension
Plan was ineffective, additional unspecified benefit payments,
attorneys' fees and interest.
On December 28, 2004, plaintiff filed a motion for class certifi-
cation. On January 25, 2005, the defendants in the Richards case
moved to dismiss the action. These motions are pending.
WorldCom, Inc. (WorldCom)
BAS, Banc of America Securities Limited (BASL), FSI, other under-
writers of WorldCom bonds issued in 2000 and 2001, and other
parties have been named as defendants in a class action lawsuit
filed in the U.S. District Court for the Southern District of New York
entitled WorldCom Securities Litigation. The complaint alleges claims
against BAS and Fleet under Sections 11 and 12 of the Securities
Act of 1933 in connection with 2000 (BAS) and 2001(BAS and Fleet)
public bond offerings and is brought on behalf of purchasers and
acquirers of bonds issued in or traceable to these offerings. On
October 24, 2003, the court certified a class consisting of "all
persons and entities who purchased or otherwise acquired publicty-
traded securities of WorldCom during the period beginning April 29,
1999 through and including June 25, 2002 and who were injured
thereby." Plaintiffs seek damages up to the amount ofthe public bond
offerings underwritten by BAS and FSI, allegedly totaling approxi-
mately $1.5 billion. The court granted BASL's motion to dismiss all
claims against BASL. On December 15, 2004, the court issued a rul-
ing, which granted in part and denied in part the underwriters' sum-
mary judgment motion and the lead plaintiff's summary judgment
motion. On December 30, 2004, the underwriters filed a motion for
reconsideration on the issue of plaintiff standing and a motion seek-
ing resolution of certain issues not decided by the summary judg-
ment ruling. These motions are pending. A trial date has been
scheduled for March 17, 2005.
In addition, the Corporation, BAS, BASL, Fleet and Robertson
Stephens International Limited (RSIL), along with other persons and
entities, have been named as defendants in numerous individual
actions that were filed in either federal or state courts arising out of
alleged accounting irregularities of the books and records of
WorldCom. Plaintiffs in these actions are typically institutional
investors, including state pension funds, who allegedly purchased
debt securities issued by WorldCom pursuant to public offerings in
1997,1998, 2000 or 2001 and a private offering in December 2000.
The majority of the complaints assert claims under Section 11 of the
Securities Act of 1933, and some complaints include additional
claims under the Securities Act of 1933 and/or claims under the
Securities Exchange Act of 1934, state securities laws, other state
statutes and common law theories. The complaints seek damages of
unspecifled amounts. Most of these cases were filed in state court,
subsequently removed by defendants to federal courts and then
transferred by the MDL Panel to the court where they were consoli-
dated with WorldCom Securities Litigation for pre-trial purposes.
Certain plaintiffs in these actions appealed the court's decision deny-
ing their requests that the court remand their actions to the state
courts in which they were originally filed. The Court of Appeals for the
Second Circuit affirmed the court in May 2004. Certain plaintiffs peti-
tioned the U.S. Supreme Court for a writ of certiorari, which the U.S.
Supreme Court denied on January 10, 2005.
Three other such actions, one in Illinois state court, another
in Tennessee state court, and another in Alabama state court
remain pending.
Other Regulatory Matters
In the course of its business, the Corporation is subject to regu�atory
examinations, information gathering requests, inquiries and investi-
gations. BAS and Banc of America Investment Services, Inc. (BAI) are
registered broker/dealers and are subject to regulation by the SEC,
the National Association of Securities Dealers, the New York Stock
Exchange and state securities regulators. In connection with several
formal and informal inquiries by those agencies, BAS and BAI have
received numerous requests, subpoenas and orders for documents,
testimony and information in connection with various aspects of their
regulated activities.
The SEC is currently conducting a formal investigation with
respect to certain trading and research-related activities of BAS dur-
ing the period 1999 through 2001. The investigation is continuing,
and the SEC staff has recently indicated informally that it is consid-
ering whether to recommend enforcement action against BAS with
respect to certain of the matters under investigation.
Note 13 Shareholders' Equity and Earnings Per Common Share
During the second quarter of 2004, the Board approved a 2-for-1 stock
split in the form of a common stock dividend and increased the quar-
terly cash dividends 12.5 percent from $0.40 to $0.45 per post-split
share. The common stock dividend was effective August 27, 2004 to
common shareholders of record on August 6, 2004 and the cash div-
idend was effective September 24, 2004 to common shareholders of
record on September 3, 2004. All prior period common share and
related per common share information has been restated to reflect
the 2-for-1 stock split.
BANK OF AMERICA 2004 131
�
�
•
�
The following table presents the monthly share repurchase activity for the three months and years ended December 31, 2004, 2003 and
2002, including total common shares repurchased under announced programs, weighted average per share price and the remaining buyback
authority under announced programs.
Number of Common Remafning Buyback Authority
�oouars �n miuions, e.cePC Per snare Shares Repurchased under Weighted Average under Announced Programs�z�
information; shares in thousands) Announced Programs�11 Per Share Prlce�11 Dollars � Shares
Three months ended March 31, 2004
Three months ended June 30, 2004
Three months ended September 30, 2004
October 1-31, 2004
November 1-30, 2004
December 1-31, 2004
Three months ended December 31, 2004
Year ended December 31, 2004
(D011ars in millions, except per share
information; shares in thousands)
Three months ended March 31, 2003
Three months ended June 30, 2003
Three months ended September 30, 2003
October 131, 2003
November 1-30, 2003
December 1-31, 2003
� Three months ended December 31, 2003
Year ended December 31, 2003
(D011ars in millions, except per share
information; shares in thousands)
�
Three months ended March 31, 2002
Three months ended June 30, 2002
7hree months ended September 30, 2002
October 1-31, 2002
November 130, 2002
December 1-31, 2002
Three months ended December 31, 2002
Year ended December 31, 2002
24,306
49,060
40,430
16,102
11,673
6,288
34,063
147,859
Number of Common
Shares Repurchased under
Announced Programs(3)
36,800
60,600
50,230
13,800
64,212
33,044
111,056
258,686
$ 40.03
41.07
43.56
44.24
45.84
46.32
45.17
42.52
Weighted Average
Per Share Price�31
$ 34.24
37.62
40.32
40.28
37.68
38.10
38.13
37.88
Number of Common
Shares Repurchased under Weighted Average
Announced Programs�51 Per Share Price�5�
62,414 $31.33
102,430 36.36
33,556 33.31
15,200 34.29
4,200 35.02
19,400 34.45
217,800 34.28
$12,378 204,178
7,978 155,118
6,217 114,688
5,505 98,586
4,969 86,913
4,678 80,625
Remaining Buyback Authority
under Announced Programs�4�
Dollars Shares
$13,930 270,370
10,610 209,770
8,585 159,540
8,029 145,740
5,610 51,528
4,351 48,484
Remaining Buyback Authority
under Announced Programs�61
Dollars Shares
$ 8,200 202,556
4,476 100,126
3,359 66,570
2,837 51,370
2,690 47,170
2,690 47,170
�11 Reduced Shareholders' Equity by $6.3 billion and increased dilutetl earnings per common share by $0.06 in 2004. These repurchases were partially offset by the issuance of approximately 121 million
shares of common stock under employee plans, which increased Shareholtlers' Equity Dy $3.9 billion, net of $127 of tleferretl compensation related to restrictetl stock awartls, and tlecreasetl tlilutetl
eamings per common share by $0.06 in 2004.
�z� On January 22, 2003, the Board authonzed a stock repurchase program of up to 260 million shares of the Corporation's common stock at an aggregate cost of $12.5 billion. This repurchase plan was
completed tluring the secontl quarter of 2004. On January 28, 2004. Ihe Boartl au[horize0 a stock repurchase program of up to 180 million shares of the Corporation's common stock at an aggregate
cost not to exceed $9.0 billion antl to De completetl within a period of 18 months.
�3) Reducetl Shareholders' Equity by $9.8 billion and increased diluted eamings per common share by 50.11 in 2003. These repurchases were partially offset by [he issuance of approximately 139 million
shares of common stock under employee plans, which increased Shareholders' Equi[y by $4.2 billion, net of $123 of deferretl compensa[ion related to restrictetl stock awards, and decreased dilutetl
earnings per common share by $0.08 in 2003.
(41 On December 11, 2001, the Board authorized a stock repurchase program of up to 260 million shares ot the Corporation's common stock at an a�gregate cost of up to $10.0 billion. This repurchase
plan was completed during the second quarter of 2003. On January 22, 2003, the Boartl au[honzed a srock repurchase prog2m of up to 260 million shares of the Corporation's common stock at an
aggregate cost of $12.5 billion. This repurchase plan was completed during the second quarter of 2004.
�5� Reduced Shareholtlers' Equity by $7.5 billion and increased diluted earnings per common share by $0.11 in 2002. These iepurchases were partially offset by the issuance of approximately S00 million
shares of common stock under employee plans, which increased Shareholders' by E2.6 billion and tlecreased diluted eamings per comrcwn share by $0.06 in 2002.
�6> On July 26, 2000, the Board authorized a stock repurchase program of up to 200 million shares of the Corporation's common stock at an aggregate cost of up to $7.5 billion. This repurchase plan was
completed tluring the first quarter of 2002. On December 11, 2001, the Board authorized a s[ock repurchase program of up to 260 million shares of the Corpora[ion's common stock at an aggregate
cost of up to $50.0 billion. This repurchase plan was completetl tluring the second quarter of 2003.
132 BANK OF AMERICA 2004
We will continue to repurchase shares, from time to time, in the open
market or in private transactions through our previously approved
repurchase plans.
At December 31, 2004, the Corporation had no shares issued
and outstanding of ESOP Convertible Preferred Stock, Series C(ESOP
Preferred Stock). ESOP Preferred Stock in the amounts of $54 mil-
lion, $4 million and $7 million for 2004, 2003 and 2002, respec-
tively, was converted into the Corporation's common stock at a ratio
of 3.36 shares of the Corporation's common stock.
At December 31, 2004, the Corporation had 690,000 shares
authorized and 382,450 shares, or $95 million, outstanding of Bank
of America 6.75% Perpetual Preferred Stock with a stated value of
$250 per share. Ownership is held in the form of depositary shares
paying dividends quarterly at an annual rate of 6.75 percent. On or
after April 15, 2006, the Corporation may redeem Bank of America
6.75% Perpetual Preferred Stock, in whole or in part, at its option, at
$250 per share, plus accrued and unpaid dividends.
The Corporation also had 805,000 shares authorized and
700,000 shares, or $175 million, outstanding of Bank of America
Fixed/Adjustable Rate Cumulative Preferred Stock with a stated value
of $250 per share. Ownership is held in the form of depositary
shares paying dividends quarterly at an annual rate of 6.60 percent
through April 1, 2006. After April 1, 2006, the rate will adjust based
on a U.S. Treasury security plus 50 bps. On or after April 1, 2006, the
Corporation may redeem Bank of America Fixed/Adjustable Rate
Cumulative Preferred Stock, in whole or in part, at its option, at $250
per share, plus accrued and unpaid dividends.
In addition to the preferred stock described above, the
Corporation had 35,045 shares authorized and 7,739 shares, or
$1 million, outstanding of the Series B Preferred Stock with a stated
value of $100 per share paying dividends quarterly at an annual rate
of 7.00 percent. The Corporation may redeem the Series B Preferred
Stock, in whole or in part, at its option, at $100 per share, plus
accrued and unpaid dividends.
All preferred stock outstanding has preference over our common
stock with respect to the payment of dividends and distribution of our
assets in the event of a liquidation or dissolution. Except in certain
circumstances, the holders of preferred stock have no voting rights.
The following table presents the changes in Accumulated OCI for 2004 and 2003.
2ooa
Income Tax
Pre-tax Expense After-tax
(oouars in miuions) Amount (Benefit) Amount
Balance, January 1 $ (3,242) $ (1,094) $ (2,148)
Net unrealized gains'(losses)�1� 1,691 547 1,144
Less: Net realized gains recorded to net income 2,513 930 1,583
Balance, December 31 $ (4,064) $ (1,477) $ (2,587)
2003
Income Tax
Pre-tax Expense After-tax
Amount (Benefit) Amount
$ 1,944 $ 712 $ 1,232
(3,774) (1,314) (2,460)
1,412 492 920
$(3,242) $(1,094) $(2,148)
(1) Net unrealized gains posses) include the valuation changes of AFS debt and marketable equiry secunties, foreign wrrency translation adjustments, denvatives, and other.
BANK OF AMERICA 2004 133
•
\_J
•
•
�
u
The calculation of earnings per common share and diluted earnings
per common share for 2004, 2003 and 2002 is presented below.
See Note 1 of the Consolidated Financial Statements for a discus-
sion on the calculation of earnings per common share.
(D011ars in millions,
except per share information;
shares in thousands)
Earnings per common share
Net income
Preferred stock dividends
Net income available to
common shareholders
Average common shares
issued and outstanding
Earnings per common share
Diluted earnings per
common share
Net income available to
common shareholders
Convertible preferred
stock dividends
Net income available to
common shareholders and
assumed conversions
verage common shares
issued and outstanding
Dilutive potential
common shares(1,2�
Total diluted average common
shares issued and outstanding
Dlluted earnings per
common share
2004 2003 2002
$ 14,143 $ 10,810 $ 9,249
(16) (4) (5)
$ 14,127 $ 10,806 $ 9,244
3,758,507 2,973,407 3,040,085
$ 3.76 $ 3.63 $ 3.04
$ 14,127 $ 10,806 $ 9,244
2 4 5
$ 14,129 $ 10,810 $ 9,249
3,758,507 2,973,407 3,040,085
65,436 56,949 90,850
3,823,943 3,030,356 3,130,935
$ 3.69 $ 3.57 $ 2.95
(1) For 2004, 2003 and 2002, average options to purchase 10 million, 19 million and 45 million
shares, respectively, were outstanding but not included in the computation of earnings per
common share because they were antidilutive.
�21 Includes incremental shares from assumed conversions of convertible preferred stock,
restricted stock units,rBSfiCtOd StOCk ShefBS e0tl StOCk Opti005.
134 BANK OF AMERICA 2004
Note 14 Regulatory Requirements and Restrictions
The Board of Governors ofthe Federal Reserve System (FRB) requires
the Corporation's banking subsidiaries to maintain reserve balances
based on a percentage of certain deposits. Average daily reserve bal-
ances required by the FRB were $6.9 billion and $4.1 billion for 2004
and 2003, respectively. Currency and coin residing in branches and
cash vaults (vault cash) are used to partially satisfy the reserve
requirement. The average daily reserve balances, in excess of vault
cash, held with the Federal Reserve Bank amounted to $70 million
and $317 million for 2004 and 2003, respectively.
The primary source of funds for cash distributions by the
Corporation to its shareholders is dividends received from its bank-
ing subsidiaries. Bank of America, N.A. and Fleet National Bank
declared and paid dividends of $5.9 billion and $1.3 billion, respec-
tively, for 2004 to the parent. In 2005, Bank of America, N.A. and
Fleet National Bank can declare and pay dividends to the parent of
$4.7 billion and $790 million plus an additional amount equal to their
net profits for 2005, as defined by statute, up to the date of any such
dividend declaration. The other subsidiary national banks can initiate
aggregate dividend payments in 2005 of $2.6 billion plus an addi-
tional amount equal to their net profits for 2005, as defined by
statute, up to the date of any such dividend declaration. The amount
of dividends that each subsidiary bank may declare in a calendar year
without approval by the OCC is the subsidiary bank's net profits for
that year combined with its net retained profits, as defined, for the
preceding two years.
The FRB, the OCC and the Federal Deposit Insurance
Corporation (collectively, the Agencies) have issued regulatory capital
guidelines for U.S. banking organizations. Failure to meet the capital
requirements can initiate certain mandatory and discretionary
actions by regulators that could have a material effect on the
Corporation's financial statements. At December 31, 2004 and
2003, the Corporation and Bank of America, N.A. were classified as
well-capitalized under this regulatory framework. At December 31,
2004, Fleet National Bank was classified as well�apitalized under
this regulatory framework. There have been no conditions or events
since December 31, 2004 that management believes have changed
the Corporation's, Bank of America, N.A:s or Fleet National Bank's
capital classifications.
The regulatory capital guidelines measure capital in relation to
the credit and market risks of both on- and off-balance sheet items
using various risk weights. Under the regulatory capital guidelines,
Total Capital consists of three tiers of capital. Tier 1 Capital includes
Common Shareholders' Equity, Trust Securities, minority interests
and qualifying Preferred Stock, less Goodwill and other adjustments.
Tier 2 Capital consists of Preferred Stock not qualifying as Tier 1
Capital, mandatory convertible debt, limited amounts of subordinated
debt, other qualifying term debt, the allowance for credit losses up to
1.25 percent of risk-weighted assets and other adjustments. Tier 3
Capital includes subordinated debt that is unsecured, fully paid, has
an original maturity of at least two years, is not redeemable before
maturity without prior approval by the FRB and includes a lock-in
clause precluding payment of either interest or principal if the pay-
ment would cause the issuing bank's risk-based capital ratio to fall or
remain below the required minimum. Tier 3 Capital can only be used
to satisfy the Corporation's market risk capital requirement and may
not be used to support its credit risk requirement. At December 31,
2004 and 2003, the Corporation had no subordinated debt that qual-
ified as Tier 3 Capital.
The capital treatment of Trust Securities is currently under
review by the FRB due to the issuing trust companies being decon-
solidated under FIN 46R. On May 6, 2004, the FRB proposed to allow
Trust Securities to continue to qualify as Tier 1 Capital with revised
quantitative limits that would be effective after a three-year transition
period. As a result, the Corporation will continue to report Trust
Securities in Tier 1 Capital. In addition, the FRB is proposing to revise
the qualitative standards for capital instruments included in regula-
tory capital. The proposed quantitative limits and qualitative stan-
dards are not expected to have a material impact to the Corporation's
current Trust Securities position included in regulatory capital.
On July 28, 2004, the FRB and other regulatory agencies issued
the Final Capital Rule for Consolidated Asset-backed Commercial
Paper Program Assets (the Final Rule). The Final Rule allows compa-
nies to exclude from risk-weighted assets, the assets of consolidated
ABCP conduits when calculating Tier 1 and Total Risk-based Capital
ratios. The Final Rule also requires that liquidity commitments pro-
vided by the Corporation to ABCP conduits, whether consolidated or
not, be included in the capital calculations. The Final Rule was effec-
tive September 30, 2004. There was no material impact to Tier 1 and
Total Risk-based Capital as a result of the adoption of this rule.
To meet minimum, adequately-capitalized regulatory require-
ments, an institution must maintain a Tier 1 Capital ratio of four
percent and a Total Capital ratio of eight percent. A well�apitalized
institution must generally maintain capital ratios 200 bpS higher than
the minimum guidelines. The risk-based capital rules have been
further supplemented by a leverage ratio, defined as Tier 1 Capital
divided by adjusted quarterly average Total Assets, after certain
adjustments. The leverage ratio guidelines establish a minimum of
three percent. Banking organizations must maintain a leverage capital
ratio of at least five percent to be classified as well-capitalized. As of
December 31, 2004, the Corporation was classified as well-capitalized
for regulatory purposes, the highest classifcation.
Net Unrealized Gains (Losses) on AFS Debt Securities, Net
Unrealized Gains on AFS Marketable Equity Securities and the Net
Unrealized Gains (Losses) on Derivatives included in Shareholders'
Equity at December 31, 2004 and 2003, are excluded from the cal-
culations of Tier 1 Capital and leverage ratios. The Total Capital ratio
excludes all of the above with the exception of up to 45 percent of
Net Unrealized Gains on AFS Marketable Equity Securities.
Regulatory Capital Developments
On June 26, 2004, the Baset Committee on Banking Supervision,
consisting of an international consortium of central banks and bank
supervisors, published the framework for a new set of risk-based cap-
ital standards (Basel II). Anticipating this event, in August 2003, the
U.S. banking regulators had already issued an advance notice of pro-
posed rulemaking to address issues in advance of publishing their
proposed rules incorporating the new Basel II standards. Since then,
the regulatory agencies have issued extensive supervisory guidance
on the proposed standards. A notice of proposed rule-making cover-
ing possible revisions to risk-based capital regulations relating to
the framework is expected in mid-2005; and final rules are expected
by mid-2006. The Corporation and other large internationally active
U.S. banks and bank holding companies will be expected to imple-
ment the framework's "advanced approaches" — the advanced inter-
nal ratings-based approach for measuring credit risk and the
advanced measurement approaches for operational risk — by year-end
2007. The Corporation is in the process of finalizing its plans to
address Basel II.
BANK OF AMERICA 2004 135
•
I �
u
•
r
�
�
The following table presents the regulatory risk-based capital ratios, actual capital amounts and minimum required capital amounts for
the Corporation, Bank of America, N.A. and Bank of America, N.A. (USA) at December 31, 2004 and 2003, and for Fleet National Bank at
December 31, 2004:
(D011ars in millions)
Risk-based capital
Tier 1
Bank of America Corporation
Bank of America, N.A.
Fleet National Bank
Bank of America, N.A. (USA)
Total
Bank ofAmerica Corporation
Bank of America, N.A.
Fleet National Bank
Bank of America, N.A. (USA)
Leverage
Bank ofAmerica Corporation
Bank of America, N.A.
Fleet National Bank
Bank of America, N.A. (USA)
�1� Dollar amount required to meet guidelines for adequately capitalized institutions.
Note 15 Employee Benefit Plans
Pension and Postretirement Pians
The Corporation sponsors noncontributory trusteed qualified pension
plans that cover substantially all officers and employees. The plans
provide defined benefits based on an employee's compensation, age
and years of service. The Bank of America Pension Plan (the Pension
Plan) provides participants with compensation credits, based on age
and years of service. The Pension Plan allows participants to select
from various earnings measures, which are based on the returns of
certain funds or common stock of the Corporation. The participant-
selected earnings measures determine the earnings rate on the indi-
vidual participant account balances in the Pension Plan. Participants
may elect to modify earnings measure allocations on a periodic basis
subject to the provisions of the Pension Plan. The benefits become
vested upon completion of five years of service. It is the policy of the
Corporation to fund not less than the minimum funding amount
required by ERISA.
The Pension Plan has a balance guarantee feature, applied at
the time a benefit payment is made from the plan, that protects par-
ticipant balances transferred and certain compensation credits from
future market downturns. The Corporation is responsible for funding
any shortfall on the guarantee feature.
The Corporation sponsors a number of noncontributory, non-
qualified pension plans. These plans, which are unfunded, provide
defined pension benefits to certain employees.
136 BANK OF AMERICA 2004
2004
Actual
Ratio Amount
8.10% $64,281
8.29 46,891
10.10 14,741
8.54 3,879
11.63 92,266
10.33 58,424
13.32 19,430
11.93 5,418
5.82 64,281
6.27 46,891
8.15 14,741
9.19 3,879
December 31
---- ------ 2003
Minimum Actual Minimum
Required�1� Ratio Amount Required«1
$31,741
22,614
5,837
1,817
63,482
45,228
11,673
3,634
33,142
22,445
5,427
1,266
7.85% $44,050
8.73 42,030
8.41
11.87
11.31
12.29
5.73
6.88
9.17
3,079
66,651
54,408
4,502
44,050
42,030
3,079
22,452
19,247
1,465
44,904
38,494
2,930
23,055
18,319
1,008
In addition to retirement pension benefits, full-time, salaried
employees and certain part-time employees may become eligible to
continue participation as retirees in health care and/or life insurance
plans sponsored by the Corporation. Based on the other provisions
of the individual plans, certain retirees may also have the cost of
these benefits partially paid by the Corporation.
As a result of the Merger, the Corporation assumed the obliga-
tions related to the plans of former FleetBoston. These plans are
substantially similar to the legacy Bank of America plans discussed
above, however, the FleetBoston Financial Pension Plan does not
allow participants to select various earnings measures, rather the
earnings rate is based on a benchmark rate. The tables within this
Note include the information related to these plans beginning on
April 1, 2004.
Reflected in these results are key changes to the Postretirement
Health and Life Plans and the Nonqualified Pension Plans. On
December 8, 2003, the President signed the Medicare Act into law. The
Medicare Act introduces a voluntary prescription drug benefit under
Medicare as well as a federal subsidy to sponsors of retiree health care
plans that provide at least an actuarially equivalent benefit. In the third
quarter of 2004, the Corporation adopted FSP No. 106-2, which resulted
in a reduction of $53 million in the Corporation's accumulated post-
retirement benefit obligation. In addition, the Corporation's net periodic
benefit cost for other postretirement benefits has decreased by $15 mil-
lion for 2004 as a result of the remeasurement. Additionally, in 2002, a
one-time curtailment charge resulted from freezing benefits for supple-
mental executive retirement agreements.
The following table summarizes the changes in the fair value of
plan assets, changes in the projected benefit obligation (PBO), the
funded status of both the accumulated benefit obligation (ABO) and
the PBO, and the weighted average assumptions used to determine
benefit obligations for the pension plans and postretirement plans at
December 31, 2004 and 2003. Prepaid and accrued benefit costs
are reflected in Other Assets, and Accrued Expenses and Other
Liabilities, respectively, on the Consolidated Balance Sheet. The dis-
count rate assumption is based on the internal rate of return for a
portfolio of high quality bonds (Moody's Aa Corporate bonds) with
maturities that are consistent with projected future cash flows. For
the Pension Plan and the FleetBoston Pension Plan (the Qualified
Pension Plans), as well as the Postretirement Health and Life Plans,
the discount rate at December 31, 2004, was 5.75 percent. For both
the Qualified Pension Plans and the Postretirement Health and Life
Plans, the expected long-term return on plan assets will be 8.50 per-
cent for 2005. The expected return on plan assets is determined
using the calculated market-related value for the Qualifled Pension
Plans and the fair value for the Postretirement Health and Life Plans.
The asset valuation method for the Qualified Pension Plans recog-
nizes 60 percent of the market gains or losses in the first year, with
the remaining 40 percent spread equally over the next four years.
Qualified Nonqualified Postretirement
Pension Plans�1� Pension Plans�l� Health and Life Plans�l�
(oouars in mil�ions) 2004 2003 2004 2003 2004 2003
Change in fair value of plan assets
(Primarily ilsted stocks, fixed income and real estate)
Fair value, January 1 $ 8,975 $ 7,518 $ - $ - $ 156 $ 181
FleetBoston balance, April 1, 2004 2,277 - 1 - 45 -
Actual return on plan assets 1,447 1,671 - - 25 25
Company contributions�2� 200 400 63 47 40 13
Plan participant contributions - - - - 82 62
Benefits paid (746) (614) (63) (47) (182) (125)
Fair va�ue, December 31 $12,153 $ 8,975 $ i $ - $ 166 $ 156
Change in projected benefit obligation
Projected benefit obligation, January 1 $ 8,428 $ 7,627 $ 712 $ 652 $ 1,127 $ 1,058
FleetBoston balance, April 1, 2004 2,045 - 377 - 196 -
Service cost 257 187 27 25 9 9
Interest cost 623 514 62 45 76 68
Plan participant contributions - - - - 82 62
Plan amendments 19 - (74) - (12) (36)
Actuarialloss 835 714 53 37 56 91
Benefits paid (746) (614) (63) (47) (182) (125)
Projected benefit obligatlon, December 31 $11,461 $ 8,428 $ 1,094 $ 712 $ 1,352 $ 1,127
Funded status, December 31
Accumulated benefit obligation (ABO) $11,025 $ 8,028 $ 1,080 $ 628 n/a n/a
Overfunded (unfunded) status of ABO 1,128 947 (1,079) (628) n/a n/a
Provision for future salaries 436 400 14 84 n/a n/a
Projected benefit obligation (PBO) 11,461 8,428 1,094 712 $ 1,352 $ 1,127
Overfunded (unfunded) status of PBO $ 692 $ 547 $ (1,093) $ (712) $ (1,186) $ (971)
Unrecognized net actuarial loss 2,364 2,153 234 195 112 139
Unrecognized transition obligation - - - - 252 291
Unrecognized prior service cost 328 364 (59) 18 - 6
Prepaid (accrued) benefit cost $ 3,384 $ 3,064 $ (918) $ (499) $ (822) $ (535)
Weighted average assumptions, December 31
Discount rate�3� 5.75% 6.25% 5.75% 6.25% 5.75% 6.25%
Expected return on plan assets 8.50 8.50 n/a n/a 8.50 8.50
Rate of compensation increase 4.00 4.00 4.00 4.00 n/a n/a
(11 The measurement date for the Qualified Pension Plans, Nonqualified Pension Plans, and Postretirement Health antl Life Plans was December 31 of each year reported.
(2) The Corporation's best estimate of its contributions to be made to the Qualifed Pension Plans, Nonqualified Pension Plans, and Postretirement Health and Life Plans in 2005 is $0, $114 and $37,
respectively.
�31 In connection with the Merger, the plans of former FleetBOSton were remeasuretl on April 1, 2004, using a tliscount rate of 6 percent.
n/a = not applicable
BANK OF AMERICA 2004 137
�
�l ,
u
•
•
•
•
Amounts recognized in the Consolidated Financial Statements at December 31, 2004 and 2003 are as follows:
Quallfied Nonqualified Postretirement
Penslon Plans Pensfon Plans Health and Life Plans
(D011ars in millions) 2004 2003 2004 2003 2004 2003
Prepaid benefit cost $ 3,384 $ 3,064 $ - $ - $ - $ -
Accrued benefit cost - - (918) (499) (822) (535)
Additional minimum liability - - (161) (129) - -
Intangible asset - - 1 18 - -
Accumulated other comprehensive income - - 160 111 - -
Net amount recognized at December 31 $3,384 $3,064 $ (918) $ (499) $ (822) $ (535)
Net periodic pension benefit cost for 2004, 2003 and 2002 included the following components:
(D011ars in millions)
Components of net periodic penslon benefit cost
Service cost $ 257 $ 187
Interest cost 623 514
Expected return on plan assets (915) (735)
Amortization of transition asset - -
Amortization of prior service cost 55 55
Recognized net actuarial loss 92 47
Recognized loss due to settlements and curtailments - -
Net periodic pension benefit cost $ 112 $ 68
Weighted average assumptions used to
determine net cost for years ended December 31
Discount rate�1� 6.25°,6 6.75°,6
Expected return on plan assets 8.50 8.50
Rate of compensation increase 4.00 4.00
(1) In connection with the Merger, the plans of former FleetBOSton were remeasuretl on Apnl 1, 2004, using a discount rate of 6 percent.
n/a = not applicable
Qualified Pension Plans Nonqualifled Pension Plans
2004 2003 2002 2004 2003 2002
For 2004, 2003 and 2002, net periodic postretirement benefit cost
included the following components:
(D011ars in millions) 2004(1) 2003 2002
Components of net periodic
postretirement benefit cost
Service cost $ 9 $ 9 $ 11
Interest cost 76 68 67
Expected return on plan assets (16) (15) (17)
Amortization of transition obligation 32 32 32
Amortization of prior service cost 1 4 6
Recognized net actuarial loss 74 89 40
Net periodic
postretirement benefit cost $176 $187 $139
Welghted average assumptions
used to determine net costfor
years ended December 31
Discount rate�2� 6.25% 6.75% 7.25%
Expected return on plan assets 8.50 8.50 8.50
(1� Includes the effect of the adoption of FSP No. SO&2, which reduced net penotlic pos[retirement
benefit cost by $15.
�2� In connection with the Merger, the plans of former FleetBOSton were remeasured on Apnl 1.
2004, using a discount rate of 6 percent.
138 BANK OF AMERICA 2004
$ 199 $ 27 $ 25
540 62 45
(746) - -
55 3 3
- 14 11
$ 48 ----- $ 106 $ 84
7.25k 625% 6.75%
8.50 n/a n/a
4.00 4.00 4.00
$ 27
44
10
11
26
$118
7.25%
n/a
4.00
Net periodic postretirement health and life expense was determined
using the "projected unit crediY' actuarial method. Gains and losses
for all benefits except postretirement health care are recognized in
accordance with the standard amortization provisions of the applica-
ble accounting standards. For the Postretirement Health Care Plans,
50 percent of the unrecognized gain or loss at the beginning of the
fiscal year (or at subsequent remeasurement) is recognized on a level
basis during the year.
Assumed health care cost trend rates affect the postretirement
benefit obligation and benefit cost reported for the Postretirement
Health Care Plans. The assumed health care cost trend rate used to
measure the expected cost of benefits covered by the Postretirement
Health Care Plans was 10 percent for 2005, reducing in steps to 5
percent in 2008 and later years. A one-percentage-point increase in
assumed health care cost trend rates would have increased the serv-
ice and interest costs and the benefit obligation by $4 million and
$56 million, respectively, in 2004, $4 million and $52 million, respec-
tively, in 2003, and $5 million and $61 million, respectively, in 2002.
A one-percentage-point decrease in assumed health care cost trend
rates would have lowered the service and interest costs and the ben-
efit obligation by $3 million and $48 million, respectively, in 2004, $3
million and $48 million, respectively, in 2003, and $4 million and $52
million, respectively, in 2002.
Plan Assets
The Qualified Pension Plans have been established as retirement
vehicles for participants, and trusts have been established to secure
benefits promised under the Qualified Pension Plans. The
Corporation's policy is to invest the trust assets in a prudent manner
for the exclusive purpose of providing benefits to participants and
defraying reasonable expenses of administration. The Corporation's
investment strategy is designed to provide a total return that, over
the long-term, increases the ratio of assets to liabilities. The strategy
attempts to maximize the investment return on assets at a level of
risk deemed appropriate by the Corporation while complying with
ERISA and any subsequent applicable regulations and laws. The
investment strategy utilizes asset allocation as a principal determi-
nant for establishing the risk/reward profile of the assets. Asset allo-
cation ranges are established, periodically reviewed, and adjusted as
funding levels and liability characteristics change. Active and passive
investment managers are employed to help enhance the risk/return
profile of the assets. An additional aspect of the investment strategy
used to minimize risk (part of the asset allocation plan) includes
matching the equity exposure of participant-selected earnings meas-
ures. For example, the common stock of the Corporation held in the
trust is maintained as an offset to the exposure related to partici-
pants who selected to receive an earnings measure based on the
return performance of common stock of the Corporation.
The Expected Return on Asset Assumption (EROA assumption)
was developed through analysis of historical market returns, histori-
cal asset class volatility and correlations, current market conditions,
anticipated future asset allocations, the funds' past experience, and
expectations on potential future market returns. The EROA assump-
tion represents a long-term average view of the perFormance of the
Qualified Pension Plans and Postretirement Health and Life Plan
assets, a return that may or may not be achieved during any one cal-
endar year. In a simplistic analysis of the EROA assumption, the build-
ing blocks used to arrive at the long-term return assumption would
include an implied return from equity securities of 9 percent, debt
securities of 6 percent, and real estate of 9 percent for all pension
plans and postretirement health and life plans.
The Qualified Pension Plans' asset allocation at December 31,
2004 and 2003 and target allocation for 2005 by asset category are
as follows:
Percentage of Plan Assets
2005 Target _at December 31
Asset Category Allocation 2004 2003
Equity securities 65-80% 75% 71%
Debt securities 20-35% 23 28
Real estate ____ _ 0-3% ___ 2 1
Total 100°� 100%
Equity securities include common stock of the Corporation in the
amounts of $871 million (7.17 percent of total plan assets) and
$809 million (9.02 percent of total plan assets) at December 31,
2004 and 2003, respectively.
The Postretirement Health and Life Plans' asset allocation at
December 31, 2004 and 2003 and target allocation for 2005 by
asset category are as follows:
Percentage of Plan Assets
2005 Target at December 31
Asset Category Allocation 2004 2003
Equity securities 60-75% 75°k 69%
Debt securities 22-40% 24 31
Real estate 0-3k 1 —
Total 100% 100%
The Bank of America Postretirement Health and Life Plans had no
investment in the common stock of the Corporation at December 31,
2004 or 2003. The FleetBoston Postretirement Health and Life Plans
included common stock of the Corporation in the amount of $0.3 mil-
lion (0.20 percent of total plan assets) at December 31, 2004.
Projected Benefit Payments
Benefit payments projected to be made from the Qualified Pension
Plans, the Nonqualified Pension Plans and the Postretirement Health
and Life Plans are as follows:
Postretirement
Qualified Nonqualified Health and Life Plans
Pension Pension Net Medicare
(oouars in muuons) Plans�s> Plans«� Payments�3� Subsidy
2005 $ 806 $ 114 $ 109 $ -
2006 831 89 109 (6)
2007 856 81 107 (6)
2008 881 93 104 (6)
2009 908 92 101 (6)
2010-2014 4,803 519 457 (26)
�1� Beneft payments expected to be made from the plans' assets.
�21 Beneft payments expected to be matle from the Corporation's assets.
(3) Beneft payments (net of retiree contributions) expectetl to be made from a combination of the
plans' and the Corporation's assets.
BANK OF AMERICA 2004 139
u
•
�
�
I �
u
•
Defined Contribution Ptans
The Corporation maintains qualified defined contribution retirement
plans and nonqualified defined contribution retirement plans. As a
result of the Merger, beginning on April 1, 2004, the Corporation
maintains the defined contribution plans of former FleetBoston.
There are two components ofthe qualified defined contribution plans,
the Bank of America 401(k) Plan and the FleetBoston Financial
Savings Plan (the 401(k) Plans), and an employee stock ownership
plan (ESOP) and a profit-sharing plan. See Note 13 of the
Consolidated Financial Statements for additional information on the
ESOP provisions.
The Corporation contributed approximately $267 million, $204
mi�tion and $200 million for 2004, 2003 and 2002, respectively, in
cash and stock. Contributions in 2003 and 2002 were utilized prima-
rily to purchase the Corporation's common stock under the terms of
the Bank of America 401(k) Plan. At December 31, 2004 and 2003,
an aggregate of 113 million shares and 45 million shares, respec-
tively, of the Corporation's common stock were held by the 401(k)
Plans. During 2004, the Corporation converted the ESOP Preferred
Stock held by the Bank of America 401(k) Plan to common stock so
that there were no outstanding shares at December 31, 2004 in the
401(k) Plans. At December 31, 2003, one million shares of ESOP
Preferred Stock were held by the Bank of America 401(k) Plan.
Plans approved by shareholders
Plans not approved by shareholders
Total
Under the terms of the ESOP Preferred Stock provision, pay-
ments to the plan for dividends on the ESOP Preferred Stock were $4
million for 2004, $4 million for 2003 and $5 million for 2002.
Payments to the plan for dividends on the ESOP Common Stock were
$181 million, $128 million and $106 million during the same periods.
In addition, certain non-U.S. employees within the Corporation
are covered under defined contribution pension plans that are sepa-
rately administered in accordance with local laws.
Note 16 Stock-based Compensation Plans
At December 31, 2004, the Corporation had certain stock-based
compensation plans that are described below. For all stock-based
compensation awards issued prior to January 1, 2003, the
Corporation applied the provisions of APB 25 in accounting for its
stock option and award plans. Stock-based compensation plans
enacted after December 31, 2002, are accounted for under the pro-
visions of SFAS 123. For additional information on the accounting for
stock-based compensation plans and pro forma disclosures, see
Note 1 of the Consolidated Financial Statements.
The following table presents information on equity compensa-
tion plans at December 31, 2004:
Number of Shares to be
Issued Upon Exercise of
Outstanding Optlons�14�
228,770,883 --
38,264,137
267,035,020
Number of Shares
Remaining for
Weighted Average Future Issuance
Exercise Price of Under Equity
Outstanding Options�2� Compensatlon Plans�3�
----------$33.69 ---- 210,238,781
29.61 —
$ 33.09 210,238,781
�11 Includes 7,422,369 unvested restricted stock units.
�21 Does not take into account unvested restnc[ed stock units.
�31 �cludes shares to be issued upon exercise of outstanding options.
�41 In atldition to the securities presented in the table above, there were outstanding options to purchase 77,938,908 shares of the Corporation's common stock antl 2,597,920 unvested restricted stock
units granted to employees of predecessor companies assumed in mergers. The weighted average oDtion price of the assumed options was $32.39 a[ December 31, 2004.
140 BANK OF AMERICA 2004
The Corporation has certain stock-based compensation plans that
were approved by its shareholders. These plans are the Key
Employee Stock Plan and the Key Associate Stock Plan. Descriptions
of the material features of these plans follow.
Key Employee Stock Plan
The Key Employee Stock Plan, as amended and restated, provided
for different types of awards. These include stock options, restricted
stock shares and restricted stock units. Under the plan, ten-year
options to purchase approximately 260 million shares of common
stock were granted through December 31, 2002, to certain employ-
ees at the closing market price on the respective grant dates.
Options granted under the plan generally vest in three or four equal
annual installments. At December 31, 2004, approximately 111 mil-
lion options were outstanding under this plan. No further awards
may be granted.
Key Associate Stock Plan
On April 24, 2002, the shareholders approved the Key Associate
Stock Plan to be effective January 1, 2003. This approval authorized
and reserved 200 million shares for grant in addition to the remaining
amount under the Key Employee Stock Plan as of December 31,
2002, which was approximately 34 million shares plus any shares
covered by awards under the Key Employee Stock Plan that terminate,
expire, lapse or are cancelled after December 31, 2002. Upon the
Merger, the shareholders authorized an additional 102 million shares
for grant under the Key Associate Stock Plan. At December 31, 2004,
approximately 110 million options were outstanding under this plan.
Approximately 10 million shares of restricted stock and restricted
stock units were granted during 2004. These shares of restricted
stock generally vest in three equal annual installments beginning one
year from the grant date. The Corporation incurred restricted stock
expense of $288 million, $276 million and $250 million in 2004,
2003 and 2002, respectively.
The Corporation has certain stock-based compensation plans
that were not approved by its shareholders. These broad-based plans
are the 2002 Associates Stock Option Plan and Take Ownership!.
Descriptions of the material features of these plans follow.
2002 Associates Stock Option Plan
The Bank of America Corporation 2002 Associates Stock Option
Plan covered all employees below a specified executive grade level.
Under the plan, eligible employees received a one-time award of a
predetermined number of options entitling them to purchase shares
of the Corporation's common stock. All options are nonqualified
and have an exercise price equal to the fair market value on the
date of grant. Approximately 108 million options were granted on
February 1, 2002. During 2003, the first option vesting trigger was
achieved. During 2004, the second option vesting trigger was
achieved. In addition, the options continue to be exercisable
following termination of employment under certain circumstances.
At December 31, 2004, approximately 33 million options were out-
standing under this plan. The options expire on January 31, 2007.
No further awards may be granted.
Take Ownership!
The Bank of America Global Associate Stock Option Program (Take
Ownership!) covered all employees below a specified executive
grade level. Under the plan, eligible employees received an award of
a predetermined number of stock options entitling them to purchase
shares of the Corporation's common stock at the fair market value
on the grant date. All options are nonqualified. At January 2, 2004,
all options issued under this plan were fully vested. These options
expire five years after the grant date. In addition, the options con-
tinue to be exercisable following termination of employment under
certain circumstances. At December 31, 2004, approximately 6 mil-
lion options were outstanding under this plan. No further awards
may be granted.
Additional stock option plans assumed in connection with vari-
ous acquisitions remain outstanding and are included in the following
tables. No further awards may be granted under these plans.
BANK OF AMERICA 2004 141
•
•
•
•
i
�
The following tables present the status of all plans at December 31, 2004, 2003 and 2002, and changes during the years then ended:
2004
Employee stock options Shares
Outstanding at January 1 320,331,380
Options assumed through acquisition 78,761,708
Granted 63,472,170
Exercised (111,958,135)
Forfeited (13,055,564)
Outstanding at December 31 337,551,559
Options exercisable at December 31 243,735,846
Weighted average fair value of
options granted during the year
2004
Weighted
Average
Exercise
Price
$30.66
29.68
40.80
27.77
34.15
32.93
30.73
$ 5.59
2003
Shares
411,447,300
61,336,790
(132,491,842)
(19,960,868)
320,331,380
167,786,372
2003
Weighted
Average
Exercise
Price
$29.10
35.03
27.72
31.41
30.66
30.02
$ 6.77
2002
Shares
369,100,032
171,671,430
(98,116,356)
(31,207,806)
411,447,300
179,151,940
2002
Weighted
Average
Exercise
Price
$27.60
30.73
26.20
29.37
29.10
29.51
$ 6.21
Weighted Weighted Weighted
Average Averege Average
Grant Grant Grant
ReStrlCted StoCk/unit awards Shares Price Shares Price Shares Price
Outstanding unvested grants at January 1 16,170,546 $31.64 15,679,946 $30.37 13,183,492 $29.21
Share obligations assumed through acquisition 7,720,476 31.62 - - - -
Granted 10,338,327 41.03 8,893,718 34.69 9,532,754 30.57
Vested (12,031,945) 29.43 (7,697,576) 32.47 (6,763,746) 28.44
Canceled (1,747,839) 38.10 (705,542) 32.85 (272,554) 29.48
Outstanding unvested grants at December 31 20,449,565 $37.12 16,170,546 $31.64 15,679,946 $30.37
The following table summarizes information about stock options outstanding at December 31, 2004:
Outstanding Options
Number Welghted Welghted
Outstanding at Average Average
December 31, Remalning F�cercise
Range of Exercise Prices 2004 Term Prlce
$ 5.00-$15.00 1,262,953 0.4 years $12.23
$15.01-$23.25 10,692,931 5.1 years 18.94
$23.26-$32.75 168,421,939 4.8 years 28.93
$32.76-$49.50 157,173,736 7.1 years 38.34
Total 337,551,559 5.9 years $32.93
142 BANK OF AMERICA 2004
Options Exercisable
Number Weighted
Exercisable at Average
December 31, Exercise
2004 Price
1,262,953 $12.23
10,692,931 18.94
168,068,284 28.92
63,711,678 37.86
243,735,846 $30.73
Note 17 Income Taxes
The components of Income Tax Expense for 2004, 2003 and 2002
were as follows:
(oouars in mi��ions) 2004 2003 2002
Current income tax expense
Federal $6,392 $4,642 $3,386
State 683 412 451
Foreign 405 260 349
Total current expense 7,480 5,314 4,186
Deferred income tax
(benefit) expense
Federal (407) (222) (270)
State (11) (45) (200)
Foreign 16 4 26
Total deferred benefit (402) (263) (444)
Total income tax expense�l� $ 7,078 $5,051 $3,742
(1) Does not reflect the tleferretl tax effects of Unrealized Gains and Losses on AFS Debt antl
Marketable Equity Securities, Foreign Currency Translation Adjustments and Derivatives that are
included in Shareholders' Equity. As a result of these tax effects, Shareholtlers' Equity increased
(tlecreased) by $383, $1,806 and $(1,090) in 2004, 2003 antl 2002, respectivety. Also, does
not reFlect tax benefits associated with the Corporation's employee stock plans which increased
Shareholders' Equiry by $401, $443 and $251 in 2004, 2003 and 2002, respectively. Goodwill
has been reduced by $101, reflecting the tax benefts attributable to 2004 exercises of employee
stock options issued by FleetBoston which had vested prior to the merger date.
Income Tax Expense for 2004, 2003 and 2002 varied from the
amount computed by applying the statutory income tax rate to
Income before Income Taxes. A reconciliation between the expected
(Dollars in millions)
Expected federal income tax expense
Increase (decrease) in taxes resulting from:
Tax-exempt income, including dividends
State tax expense, net of federal benefit
Goodwill amortization
IRS tax settlement
Low income housing credits/other credits
Foreign tax differential
Other
Total Income tax expense
federal income tax expense using the federal statutory tax rate of 35
percent to the Corporation's actual Income Tax Expense and resutting
effective tax rate for 2004, 2003 and 2002 follows:
2004
2003
2002
Amount Percent Amount Percent Amount Percent
.— .__.__.— _____.___.____— . __._.___—
$7,427 35.0% $5,551 35.0% $4,547 35.0%
(526)
437
(352)
(78)
170
$ 7,078
During 2002, the Corporation reached a tax settlement agreement
with the IRS. This agreement resolved issues for numerous tax
returns of the Corporation and various predecessor companies and
finalized all federal income tax liabilities, excluding those relating to
FleetBoston, through 1999. As a result of the settlement, reductions
in Income Tax Expense of $84 million in 2003 and $488 million in
2002 were recorded representing refunds received and reductions in
previously accrued taxes.
(2.5) (325)
2.1 239
- 12
- (84)
(1.6) (212)
(0.4) (50)
0.8 (80)
33.4°� $5,051
(2.1) (297) (2.3)
1.5 210 1.6
0.1 - -
(0.5) (488) (3.8)
(1.3) (222) (1.7)
(0.3) (58) (0.4)
(0.6) 50 0.4
31.8% $3,742 28.8%
The IRS is currently examining the Corporation's federal income
tax returns for the years 2000 through 2002, as well as the tax
returns of FleetBoston and certain other subsidiaries for years rang-
ing from 1997 to 2000. The Corporation's current estimate of the
resolution of these various examinations is reflected in accrued
income taxes; however, final settlement of the examinations or
changes in the Corporation's estimate may result in future income tax
expense or benefit.
BANK OF AMERICA 2004 143
•
�
�
�
�
•
Significant components of the Corporation's net deferred tax
liability at December 31, 2004 and 2003 are presented in the
following table.
December 31
(D011ars in milllons) 2004 2003
Deferred tax liabilitfes
Equipment lease financing $ 6,192 $5,321
Investments 1,088 905
Intangibles 803 955
Deferred gains and losses 251 189
State income taxes 192 281
Fixed assets 47 246
Employee compensation and
retirement benefits 13 17
Other 435 560
Gross deferred tax liabilities 9,021 8,474
Deferred tax assets
Allowance for credit losses 3,668 2,421
Security valuations 2,326 1,876
Accrued expenses 533 421
Foreign tax credit carryforward 467 —
Available-for-sale securities 146 46
Loanfees and expenses 241 85
Net operating loss carryfonvards 91 129
Other 1,150 280
Gross deferred tax assets 8,622 5,258
Valuation allowance�l� (155) (120)
Total deferred tax assets,
net of valuation allowance 8,467 5,138
Net deferred tax Iiabilitfes�2� $ 554 $3,336
(1� At December 31, 2004, $70 of the valuation allowance related ro gross deferred tax assets
was attributable to the Mergec Future recognition of the tax attributes associatetl with these
gross deferred tax assets would result in tax benefits being allocated to reduce Goodwill.
�2� The Corpora[ion's net tleferretl tax liabiliry was adjustetl on April 1, 2004, to include a net
tleferretl tax asset of $2.0 billion attributable to t�e Merger.
The valuation allowance recorded by the Corporation at December 31,
2004 and 2003 represents net operating loss carryforwards gener-
ated by foreign subsidiaries and certain state deferred tax assets,
where, in each case, it is more likely than not that realization will not
occur. These net operating loss carryforwards begin to expire after
2005 and could fully expire after 2010.
The foreign tax credit carryforward reflected in the table above
represents foreign income taxes paid that are creditable against
future U.S. income taxes. If not used, these credits begin to expire
after 2009 and could fully expire after 2014.
At December 31, 2004 and 2003, federal income taxes had not
been provided on $1.1 bitlion and $871 million, respectively, of undis-
tributed earnings of foreign subsidiaries, earned prior to 1987 and
after 1997 that have been reinvested for an indefinite period of time.
If the earnings were distributed, an additional $221 million and $185
million of tax expense, net of credits for foreign taxes paid on such
earnings and for the related foreign withholding taxes, would result in
2004 and 2003, respectively.
144 BANK OF AMERICA 2004
On December 21, 2004, the FASB issued FSP No. 109-2 that
provides accounting and disclosure guidance for the foreign earn-
ings repatriation provision within the Act. For additional information
on FSP No. 109-2 and the Act, see Note 1 of the Consolidated
Financial Statements.
Note 18 Fair Value of Financial Instruments
SFAS No. 107, "Disclosures About Fair Value of Financial
Instruments" (SFAS 107), requires the disclosure of the estimated
fair value of financial instruments. The fair value of a financial instru-
ment is the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or
liquidation sale. Quoted market prices, if available, are utilized as
estimates of the fair values of financial instruments. Since no quoted
market prices exist for certain of the Corporation's financial instru-
ments, the fair values of such instruments have been derived based
on management's assumptions, the estimated amount and timing of
future cash flows and estimated discount rates. The estimation meth-
ods for individual classifications of financial instruments are
described more fully below. Different assumptions could significantly
affect these estimates. Accordingly, the net realizable values could
be materially different from the estimates presented below. In addi-
tion, the estimates are only indicative of the value of individual finan-
cial instruments and should not be considered an indication of the
fair value of the combined Corporation.
The provisions of SFAS 107 do not require the disclosure of the
fair value of lease financing arrangements and nonfinancial instru-
ments, including intangible assets such as goodwill, franchise, and
credit card and trust relationships.
Short-term Financial Instruments
The carrying value of short-term financial instruments, including cash
and cash equivalents, time deposits placed, federal funds sold and
purchased, resale and repurchase agreements, commercial paper
and other short-term investments and borrowings, approximates the
fair value of these instruments. These financial instruments generally
expose the Corporation to limited credit risk and have no stated
maturities or have short-term maturities and carry interest rates that
approximate market.
Financial Instruments Traded in the Secondary Market
Held-to-maturity securities, AFS debt and marketable equity securities,
trading account instruments and long-term debt traded actively in the
secondary market have been valued using quoted market prices. The
fair values of trading account instruments and securities are reported
in Notes 3 and 5 of the Consolidated Financial Statements.
Derivative Financial Instruments
All derivatives are recognized on the Consolidated Balance Sheet at
fair value, net of cash collateral held and taking into consideration
the effects of legally enforceable master netting agreements that
allow the Corporation to settle positive and negative positions with
the same counterparty on a net basis. For exchange-traded contracts,
fair value is based on quoted market prices. For non-exchange traded
contracts, fair value is based on dealer quotes, pricing models or
quoted prices for instruments with similar characteristics. The fair
value of the Corporation's derivative assets and liabilities is pre-
sented in Note 4 of the Consolidated Financial Statements.
Loans
Fair values were estimated for groups of similar loans based upon
type of loan and maturity. The fair value of loans was determined by
discounting estimated cash flows using interest rates approximating
the Corporation's current origination rates for similar loans and
adjusted to reflect the inherent credit risk. Where quoted market
prices were available, primarily for certain residential mortgage loans
and commercial loans, such market prices were utilized as estimates
for fair values.
Substantially all of the foreign loans reprice within relatively
short timeframes. Accordingly, for foreign loans, the net carrying val-
ues were assumed to approximate their fair values.
Deposits
The fair value for deposits with stated maturities was calculated by
discounting contractual cash flows using current market rates for
instruments with similar maturities. The carrying value of foreign time
deposits approximates fair value. For deposits with no stated matu-
rities, the carrying amount was considered to approximate fair value
and does not take into account the significant value of the cost
advantage and stability of the Corporation's long-term relationships
with depositors.
The book and fair values of certain financial instruments at
December 31, 2004 and 2003 were as follows:
December 31
2004 2003
Book Fair Book Fair
(oouars in miiiions) Value Value Value Value
Financial assets
Loans $491,615 $496,873 $353,924 $357,770
Financlal liabilities
Deposits 618,570 618,409 414,113 414,379
Long-term debt 98,078 102,439 75,343 79,442
Note 19 Business Segment Intormation
In connection with the Merger, the Corporation realigned its business
segment reporting to reflect the new business modei of the combined
company. The Corporation reports the results of its operations
through four business segments: Global Consumer and Small
Business Banking, Global Business and Financial Services, Global
Capital Markets and Investment Banking, and Global Wealth and
Investment Management. Certain operating segments have been
aggregated into a single business segment. The Corporation may
periodically reclassify business segment results based on modifica-
tions to its management reporting and profitability measurement
methodologies, and changes in organizational alignment.
Global Consumer and Small Business Banking provides a diver-
sified range of products and services to individuals and small busi-
nesses through multiple delivery channels. Global Business and
Financial Services primarily provides commercial lending and treasury
management services to middle-market companies. Global Capital
Markets and Investment Banking provides capital-raising solutions,
advisory services, derivatives capabilities, equity and debt sales and
trading for the Corporation's clients as well as traditional bank
deposit and loan products, treasury management and payment
services to large corporations and institutional clients. Global Wealth
and Investment Management offers investment, fiduciary and com-
prehensive banking and credit expertise, asset management
services to institutional clients, high-net-worth individuals and retail
customers, investment, securities and financial planning services to
affluent and high-net-worth individuals, and retail clearing services
for broker/dealers.
All Other consists primarily of Latin America, Equiry Investments,
Noninterest Income and Expense amounts associated with the ALM
process, including Gains on Sales of Debt Securities, the allowance
for credit losses process, the residual impact of inethodology alloca-
tions, intersegment eliminations, and the results of certain consumer
finance and commercial lending businesses that are being liquidated.
Latin America includes the Corporation's full-service Latin American
operations in Brazil, Argentina and Chile.
Total Revenue includes Net Interest Income on a fully taxable-
equivalent basis and Noninterest Income. The adjustment of Net
Interest Income to a fully taxable-equivalent basis results in a corre-
sponding increase in Income Tax Expense. The Net Interest Income
of the business segments includes the results of a funds transfer
pricing process that matches assets and liabilities with similar inter-
est rate sensitivity and maturity characteristics. Net Interest Income
also reflects an allocation of Net Interest Income generated by
assets and liabilities used in the Corporation's ALM process.
Certain expenses not directly attributable to a specific business
segment are allocated to the segments based on pre-determined
means. The most significant of these expenses include data pro-
cessing costs, item processing costs and certain centralized or
shared functions. Data processing costs are allocated to the seg-
ments based on equipment usage. Item processing costs are allo-
cated to the segments based on the volume of items processed for
each segment. The costs of certain centralized or shared functions
are allocated based on methodologies which reflect utilization.
BANK OF AMERICA 2004 145
•
�
•
•
The following table presents Total Revenue and Net Income for 2004, 2003 and 2002, and Total Assets at December 31, 2004 and 2003
for each business segment, as well as AllOther.
Business Segments
(Dollars in millions)
Net interest income (fully taxable-equivalent basis)
Noninterest income
Total revenue
Provisian for credit lasses
Gains on sales of debt securities
Amortization of intangibles
Other noninterest expense
Income before income taxes
InCOme tax expense
Net income
Period-end total assets
(Dollars in millions)
Net interest income (fully taxable-equivalent basis)
Noninterest income
� Total revenue
Provision for credit losses
Losses on sales of debt securities
Amortization of intangibles
Other noninterest expense
Income before income taxes
Income tax expense
Net income
Period-end total assets
•
(D011ars in millions)
Net interest income (fully taxable-equivalent basis)
Noninterest income
Total revenue
Provision for credit losses
Gains on sales of debt securities
Amortization of intangibles
Other noninterest expense
Income before income taxes
Income tax expense (benefit)
Net income
Period-end total assets
�11 There were no matenal intersegment revenues among the segments.
146 BANK OF AMERICA 2004
At and for the Year Ended December 31
Global Consumer and
Total Corporatlon Small Business Bankingc1)
2004 2003 2002 2004 2003 2002
$ 29,513 $ 22,107 $ 21,511 $ 17,308 $ 12,114 $ 11,411
20,097 16,450 13,580 9,549 8,816 6,911
49,610 38,557 35,091 26,857 20,930 18,322
2,769 2,839 3,697 3,341 1,678 1,521
2,123 941 630 117 13 20
664 217 218 463 147 143
26,363 19,938 18,227 12,871 10,186 9,168
21,937 16,504 13,579 10,299 8,932 7,510
7,794 5,694 4,330 3,751 3,226 2,769
$ 14,143 $ 10,810 $ 9,249 $ 6,548 $ 5,706 $ 4,741
$ 1,110,457 $ 719,483 $ 378,359 $ 264,578
Global Business and Global Capital Markets and
Financial Services�1� Investment Bankingl1)
2004 2003 2002 2004 2003 2002
$ 4,593 $ 3,118 $ 3,195 $ 4,122 $ 4,289 $ 4,345
2,129 1,399 1,214 4,927 4,045 3,856
6,722 4,517 4,409 9,049 8,334 8,201
(241) 458 453 (459) 303 768
- - - (10) (14) (92)
82 21 21 44 24 29
2,394 1,776 1,810 6,512 5,303 4,896
4,487 2,262 2,125 2,942 2,690 2,416
1,654 791 756 992 896 814
$ 2,833 $ 1,471 $ 1,369 $ 1,950 $ 1,794 $ 1,602
$ 178,093 $ 107,791 $ 307,451 $ 225,839
Global Wealth and
Investment Managementll� All Other
2004 2003 2002 2004 2003 2002
$ 2,854 $ 1,952 $ 1,923 $ 636 $ 634 $ 637
3,064 2,078 1,706 428 112 (107)
5,918 4,030 3,629 1,064 746 530
(20) 11 320 148 389 635
- - - 2,016 942 702
62 20 20 13 5 5
3,387 2,081 1,899 1,199 592 454
2,489 1,918 1,390 1,720 702 138
905 684 507 492 97 (516)
$ 1,584 $ 1,234 $ 883 $ 1,228 $ 605 $ 654
E 121,974 $ 69,370 $ 124,580 $ 51,905
The following table presents reconciliations of the four business segments' Total Revenue, Net Income and Total Assets to consolidated totals.
The adjustments presented in the table below include consolidated income and expense amounts not specifically allocated to individual
business segments.
(D011ars in millions)
Segments' revenue
Adjustments:
Revenue associated with unassigned capital
ALM activities�1�
Latin America
Equity investments
Liquidating businesses
Fully taxable-equivalent basis adjustment
Other
Consolidated revenue
Year Ended December 31
-- --- -- -- --. ------- --
2004 2003 2002
$ 48,546 $ 37,811 $ 34,561
318
(74)
834
440
282
(716)
(736)
$ 48,894
674
500
33
(256)
324
(643)
(529)
$ 37,914
560
294
43
(445)
539
(588)
(461)
$ 34,503
Segments' net income $ 12,915 $ 10,205 $ 8,595
Adjustments, net of taxes:
Earnings associated with unassigned capital 212 459 399
ALM activities�l�z� 1,117 870 523
Latin America 310 (48) (148)
Equity investments 192 (249) (330)
Liquidating businesses 79 (19) 58
Merger and restructuring charges (411) - -
Litigation expense 66 (150) -
Tax settlement - - 488
Severance charge - - (g6)
Other (337) (258) (250)
Consolldated net income $ 14,143 $ 10,810 $ 9,249
Segments' total assets
Adjustments:
ALM activities
Securities portfolio
Latin America
Equity investments
Liquidating businesses
Elimination of excess earning asset allocations
Other, net
Consolidated total assets
(1) Includes pretax whole mortgage loan sale gains/(losses) of $(2), $772 and $500 for 2004, 2003 and 2002, respectively.
�2� Includes pre-tax Gains on Sales of Debt Securities of $2,011, $938 antl $701 for 2004, 2003 antl 2002, respectively.
December 31
2004 2003
$ 985,877 $ 667,578
131,751 103,313
177,803 59,333
12,402 515
8,064 6,250
4,390 6,528
(254,225) (177,303)
44,395 53,269
$ 1,110,457 $ 719,483
BANK OF AMERICA 2004 147
•
�
` J
�
�
•
Note 20 Bank of America Corporation (Parent Company Only)
The following tables present the Parent Company Only financial information:
Condensed Statement of Income
(Dollars in millions)
Income
Dividends from subsidiaries:
Bank subsidiaries
Other subsidiaries
Interest from subsidiaries
Other income
Total income
Year Ended December 31
2004 2003 2002
$ 8,100 $ 8,950 $ 11,100
133 34 10
1,085 610 775
1,351 2,140 1,138
10,669 11,734 13,023
Expense
Interest on borrowed funds 1,861 1,391 1,700
Noninterest expense 1,797 2,181 1,361
Total expense 3,658 3,572 3,061
Income before income taxes and equity in undistributed earnings of subsidiaries 7,011 8,162 9,962
Income tax (expense) benefit (122) 461 1,154
Income before equity in undistributed earnings of subsidiaries 6,889 8,623 11,116
Equity in undistributed earnings of subsidiaries:
Bank subsidiaries 6,680 2,093 (1,607)
Other subsidiaries 574 94 (260)
Total equity In undistributed earnings (losses) of subsidlarles 7,254 2,187 (1,867)
Net income $ 14,143 $ 10,810 $ 9,249
Net income available to common shareholders $ 14,127 $ 10,806 $ 9,244
Condensed Balance Sheet
(D011ars in millions)
Assets
Cash held at bank subsidiaries
Securities
Receivables from subsidiaries:
Bank subsidiaries
Other subsidiaries
Investments in subsidiaries:
Bank subsidiaries
Other subsidiaries
Otherassets
Total assets
Liabilities and shareholders' equfty
Commercial paper and other short-term borrowings
Accrued expenses and other liabilities
Payables to subsidiaries:
Bank subsidiaries
Other subsidiaries
Long-term debt
Shareholders' equity
Total liabilities and shareholders' equity
148 BANK OF AMERICA 2004
December 31
2004 2003
$ 47,138 $ 20,436
2,694 1,441
10,546 10,042
19,897 15,103
114,868 59,085
1,499 818
13,859 13,459
$210,501 $120,384
$ 20,774 $ 3,333
7,124 7,469
76
13
82,869
99,645
$ 210,501
173
29
61,400
47,980
$120,384
Condensed Statement of Cash Flows
(D011ars in millions)
Operating activitles
Net income
Reconciliation of net income to net cash provided by operating activities:
Equity in undistributed earnings (losses) of subsidiaries
Other operating activities, net
Net cash provided by operating activities
Year Ended December 31
2004 2003 2002
$ 14,143 $ 10,810 $ 9,249
(7,254) (2,187) 1,867
(1,168) 40 (2,537)
----5,721 -- --- - 8,663 — 8,579
Investing activltles
Net purchases of securities (1,348) (59) (428)
Net payments from (to) subsidiaries 821 (1,160) (2,025)
Other investing activities, net 3,348 (1,597) (158)
Net cash provided by (used in) investing activities 2,821 (2,816) (2,611)
Financing activities
Net increase (decrease) in commercial paper and other short-term borrowings 16,332 2,482 (7,505)
Proceeds from issuance of long-term debt 19,965 14,713 8,753
Retirement of long-term debt (9,220) (5,928) (1,464)
Proceeds from issuance of common stock 3,939 4,249 2,632
Common stock repurchased (6,286) (9,766) (7,466)
Cash dividends paid (6,468) (4,281) (3,709)
Other financing activities, net (102) 276 (338)
Net cash provided by (used in) financing activities 18,160 1,745 (9,097)
Net increase (decrease) in cash held at bank subsidiaries 26,702 7,592 (3,129)
Cash held at bank subsidiaries at January 1 20,436 12,844 15,973
Cash held at bank subsidiaries at December 31 $ 47,138 $ 20,436 $ 12,844
•
�
•
BANK OF AMERICA 2004 149
�
�
•
Note 21 Performance by Geographic Area
Since the Corporation's operations are highly integrated, certain asset, liability, income and expense amounts must be allocated to arrive at
Total Assets, Total Revenue, Income (Loss) Before Income Taxes and Net Income (Loss) by geographic area. The Corporation identifies its
geographic performance based upon the business unit structure used to manage the capital or expense deployed in the region, as applicable.
This requires certain judgments related to the allocation of revenue so that revenue can be appropriately matched with the related expense or
capital deployed in the region.
At December 31 Year Ended December 31
Income (Loss)
Total Total Before
(Dollars in millions) Year Assets�11 Revenue�21 Income Taxes
Domestic�3) 2004 $ 1,046,639 $ 46,156 $ 20,072 $
2003 672,834 36,541 15,955
2002 32,884 13,537
Asia 2004 21,658 708 330
2003 20,016 414 82
2002 639 218
Europe, Middle East and Africa 2004 27,536 1,136 353
2003 23,858 847 (14)
2002 838 (367)
Latin America and the Caribbean 2004 14,624 894 466
2003 2,775 112 (162)
2002 142 (397)
Total Foreign 2004 63,818 2,738 1,149
2003 46,649 1,373 (94)
2002 1,619 (546)
Total Consolidated 2004 $ 1,110,457 $ 48,894 $ 21,221 $
2003 719,483 37,914 15,861
2002 34,503 12,991
�1� Total Assets includes long-livetl assets, which are primarily locatetl in the U.S.
1z1 There were no material intercompany revenues between geographic regions for any of the penotls presented.
�3� Includes the Corporation's Canadian operations, which had Total Assets of $4,849 and $2,799 at December 31, 2004 and 2003, respectively; Total Revenue of $88, $96 antl $96; Income before
Income Taxes of $49, $60 and $111; and Net Income of $41, $12 and $83 for the years ended December 31, 2004, 2003 and 2002, respectively.
150 BANK OF AMERICA 2004
Net
Income
(LO55)
13,384
10,843
9,548
237
71
157
234
(1)
(210)
288
(103)
(246)
759
(33)
(299)
14,143
10,810
9,249
Executive Officers and Directors
Bank of America Corporation and Subsidiaries
Executive Officers
Kenneth D. Lewis
Chairman, President and
Chief Executive Officer
Amy Woods Brinkley
Global Risk Executive
Alvaro G. de Molina
President, Global Capital Markets and
Investment Banking
Barbara J. Desoer
Global Technology, Service and
Fulfillment Executive
Liam E. McGee
President, Global Consumer and
Small Business Banking
Brian T. Moynihan
Presideni, Global Wealth and
Investment Management
Marc D. Oken
Chief Financial O�cer
H. Jay Sarles
Vice Chairman and
Special Advisor to the CEO
R. Eugene Taylor
President, Global Business and
Financial Services
Board of Directors
William Barnet, III
Chairman, President and
Chief Executive Officer
The Barnet Company, Inc.
Real estate investing
Spartanburg, SC
Charles W. Coker
Chairman
Sonoco Products Company
Paper and plastics products manufacturing
Hartsville, SC
John T. Coilins
Chief Executive Officer
The Collins Group, Inc.
Venture capital, private equity
investments and management
Boston, MA
Gary L. Countryman
Chairman Emeritus
Liberty Mutual Holding Company, Inc.
Financial services
Boston, MA
Paul Fulton
Chairman
Bassett Furniture Industries, Inc
Furniture manufacturing
Winston-Salem, NC
Charles K. Gifford
Retired Chairman
Bank of America Corporation
Financial services
Charlotte, NC
Donald E. Guinn
Chairman Emeritus
Pacific Telesis Group
Telecommunications
Bend, OR
Kenneth D. Lewis
Chairman, President and
Chief Executive Officer
Bank of America Corporation
Financial services
Charlotte, NC
Walter E. Massey
President
Morehouse College
Education
Atlanta, GA
Thomas J. May
Chairman, President and
Chief Executive Officer
NSTAR
Energy utility
Boston, MA
Patricia E. Mitchell
President and Chief Executive Officer
Public Broadcasting Service
Noncommercial broadcasting
Alexandria, VA
Edward L. Romero
Former Ambassador to Spain
Albuquerque, NM
Thomas M. Ryan
Chairman, President and
Chief Executive Officer
CVS Corporation
Retail pharmacies
Woonsocket, RI
0. Temple Sloan, Jr.
Chairman and Chief Executive Officer
International Group, Inc.
Automotive replacement parts
distributing holding company
Raleigh, NC
Meredith R. Spangler
Trustee and Board Member
C.D. Spangler Construction
Construction
Charlotte, NC
Jackie M. Ward
Outside Managing Director
Intec Telecom Systems PLC
Telecommunications software
Atlanta, GA
BANK OF AMERICA 2004 151
u
/ 1
u
•
•
�
•
Corporate Information
Bank of America Corporation and Subsidiaries
Headquarters
The principal executive offices of Bank of America Corporation
are located in the Bank of America Corporate Center, Charlotte,
NC 28255.
Shareholders
The Corporation's common stock is listed on the New York Stock
Exchange and the Pacific Stock Exchange under the symbol BAC.
The Corporation's common stock is also listed on the London
Stock Exchange, and certain shares are listed on the Tokyo Stock
Exchange. The stock is typically listed as BankAm in newspapers.
As of February 23, 2005, there were 278,722 record holders
of the Corporation's common stock.
The Corporation's annual meeting of shareholders will be held at
10 a.m. local time on April 27, 2005, in the Belk Theater of the
North Carolina Blumenthal Performing Arts Center, 130 North Tryon
Street, Charlotte, North Carolina.
For general shareholder information, call Jane Smith, shareholder
relations manager, at 1.800.521.3984. For inquiries concerning
dividend checks, the SharesDirect dividend reinvestment plan,
electronic deposit of dividends, tax information, transferring
ownership, address changes or lost or stolen stock certificates,
contact EquiServe Trust Company, P. 0. Box 43095, Providence,
RI 02940-3095; call Bank of America Shareholder Services
at 1.800.642.9855; or use online access at
www.bankofamerica.com/shareholder.
Analysts, portfolio managers and other investors seeking additional
information should contact Kevin Stitt, investor relations executive,
at 1.704.386.5667 or Lee McEntire, investor communications
manager, at 1.704.388.6780.
Visit the Investor Relations area of the Bank of America Web site
at www.bankofamerica.com/investor. Under the Shareholders
section are stock and dividend information, financial news
releases, links to Bank of America SEC filings and other material
of interest to the Corporation's shareholders.
152 BANK OF AMERICA 2004
Annual Report on Form 10-K
The Corporation's 2004 Annual Report on Form 10-K is available
at www.bankofamerica.com. The Corporation also will provide a
copy of the 2004 Annual Report on Form 10-K (without exhibits)
upon written request addressed to:
Bank of America Corporation
Shareholder Relations Department
NC1-007-23-02
100 North Tryon Street
Charlotte, NC 28255
Customers
For assistance with Bank of America products and services,
call 1.800.900.9000, or visit the Bank of America Web site at
www.bankofamerica.com.
News Media
News media seeking information should visit the Newsroom
area of the Bank of America Web site for news releases,
speeches and other material relating to the Corporation,
including a complete list of the corporation's media relations
specialists grouped by business specialty or geography.
To do so, go to www.bankofamerica.com, and choose the
About Bank of America tab. Under the Bank of America News
section, select Newsroom.
NYSE and SEC Certifications
The Corporation filed with the New York Stock Exchange ("NYSE")
on June 22, 2004, the Annual CEO Certification as required by the
NYSE corporate governance listing standards. The Corporation has
also filed as exhibits to its 2004 Annual Report on Form 10-K
the CEO and CFO certifications as required by Section 302 of the
Sarbanes-Oxley Act.
�
BankofAmerica ��� Higher Standards
�
02005 Bank of Amerlca Corporatlon
00-0413428 3/2005
Recycle�E Paper •
Treasury Services
Terms and Conditions
�__, f
AUTHORIZATION AND AGREEMENT FOR TREASURY SERVICES
I am an authorized representative of the organization specified below (the "Client"). The Client has received Bank of America's Treasury Services �
Terms and Conditions Booklet (the "BookleY') and agrees to adhere to the Booklet and any applicable User pocumentation from Bank oF America+
("Bank"). The Services covered by the Booklet and the banks providing Services are listed on the accompanying List of Banks and Services,
which we may change from time to time. Capitalized terms used in this Authorization and Agreement form, not otherwise defined, have the
meanings given to them in the Booklet.
After I sign below on behalf of the Client, the Client may from time to time request the Bank to provide any of the Services described in the
Booklet. The Client may begin to use any such Service once Bank has approved such use and has received all required and properly executed
forms and the Client has successfully completed any testing or training requirements. The Booklet supersedes other agreements between the
Client and the Bank, as described under the General Matters heading in the Booklet, with regard to the provision of Services.
I warrant that the Client has taken all action required by its organizational or constituent documents to authorize me to execute and deliver
on behalf of the Client this Authorization and Agreement form and any other documents the Bank may require with respect to a Service. I am
authorized to enter into all transactions contemplated by the provision of Services to the Client. These may include, but are not limited to, giving
the Bank instructions with regard to Electronic Funds Transfer Services and designating employees or agents to act in the name and on behalf of
the Client.
Guidelines for completion:
If Client is a: Who must sign:
corporation . . . . . . . . . . . . . . . . . . . . . . .any authorized officer
limited liability company . . . . . . . . . . . .all members, or any authorized officer*
partnership (general or limited) . .. . . . .any general partner*
limited liability partnership .. . . .. . . . .the managing partner*
sole proprietorship .. . . . . . . . . . .. ... .the sole proprietor
governmental entity . . . . . . . . . . . . . . . .the Treasurer*
* Includes any individual authorized under ClienYs charter or organizational or constituent documents. The legal name of any member,
managing member, manager or general partnerwho is signing and who is not an individual must appear in the signature block. Note that
in most cases the Client must also complete the Certification form which follows. �
ORGANIZATION' CLIENTS LE6AL NAM
Signature o Authorize Representative Signature of Authorize Representative, i two are require y Client
[Print Name ofAuthorized Representative Print Name ofAuthorized Representative
Print Tit e of Authorize Representative inc ude the lega name of Print Title of Authonzed Representative include the egal name of
any member, managing member, manager or general partner who is any member, managing member, manager or general partner who is
signing and who is not an individual)] signing and who is not an individual)]
The following addresses may be used for giving notices in connection Address(es) for Bank Notices:
with this Booklet except as you or we provide the other difFerent Bank of America, N.A.
addresses to be used in conjunction with your accounts or particular pocumentation Management (CA4-706-04-07)
Services. P.O. Box 27128
Concord,CA 94527-9904
Address for Client Notices: Fax No.: (925) 675-7131
and, if filled in, the following:
Telephone: (� -�
Fax: (� Telephone: �)
Fax: ��
AD-AG-0455B �
AUTHORIZATION AND AGREEMENT CERTIFICATION
certify that each signature appearing on the previous page for Client is the true signature of a person authorized to execute the form on behalf
f Client, and i further certify that I have full authoriry to execute this certification. The Bank is entitled to rely upon this certification until written
notice of its revocation is delivered to the Bank.
Guidelines for completion: This Certification should not be si�ned by the individual who signed the Authorization and Agreement
If Client is a: Who must sign:
corporation . .. . . . . . . . . . . . . . . . . . . . .any authorized officer
limited liabiliry company . . . . . . . . . . . .any member or authorized officer
limited liability partnership .. . .. . . . ..any partner
partnership (general or limited) ... ... .any general partner
sole proprietorship ... . . . . . .. . . . . . . .no signature required
governmental entity . . . . . . . . . . . . . . . .the entity's counsel, or any other individual as permitted by
the entity's organizational documents
The legal name of any member, managing member, manager or general partner who is signing and who is not an individual must appear in the
signature block.
Note: If Client is not a U.S. based entity, it is not required to complete this certification, but must provide authorizing certificates
or mandates.
Date
�
•
ORGANIZATION' CLIENT LEGAL N
Signature of Certi ing Representative
Print Name of Certifying Representative
Print Tit e o Certi ing Representative inc u e the lega name of any
member, managing member, manager or general partner who is sign-
ing and who is not an individual)j
� AD-AG-04556
TREASURY SERVICES DELEGATION OF AUTHORITY FORM
This form is optional and is to be used when you wish to delegate authority to sign various authorization forms to someone other than the �
person who signed the Authorization and Agreement form in the front of this Booklet.
By signing below, you authorize the incumbent of the specified position listed in Section A or each person listed in section B below, acting
alone, to execute documents that we may request, and any amendments or renewals thereof, pertaining to the use of Seroices, including but not
limited to designating one or more persons (which may include himself or hersel� authorized to initiate, amend, cancel, confirm orverify the
authenticity of instructions to us for Services, whether given orally, electronically or by facsimile instructions, and to revoke any authorization
granted to any such person, as he or she deems appropriate. The signer of this form has the same authority described above for each Service
with us, unless otherwise specified. We are entitled to rely upon this delegation until written notice of its revocation is received by us.
Guidelines for Completion: Fill out either section A or section B, or both, depending on your needs.
• To delegate authority to any person holding a specific title, fill out section A.
• To delegate authority to specific individuals by name, fill out section B.
For each name or title, indicate "All" in the "Service" column if the person or title has authority to sign documents for all Services which you
receive from us. Otherwise, indicate specific Services for which the person or title has authority. For each name or title, indicate the entity or
entities forwhich the person ortitle has authorityto sign documents.
A. TO DELEGATE AUTHORITY TO ANY PERSON HOLDING SPECIFIC POSITIONS
B. TO DELEGATE AUTHORITY TO SPECIFIC INDIVIDUALS
�
CLIENT AUTHORIZATION
Client Authorization Instructions: The same person who signed the Authorization and Agreement for Treasury Services form must sign this
Treasury Services Delegation of Authority form.
Dated CLIENTS LEGAL NAME
Signature ofAuthorize Representative
[Print Name ofAuthorized Representative]
Print Title include the egal name of any member, managing
member, manager or general partnerwho is signing and who •
is not an individual)]
AD-AG-0455B �
•
�
r �
�
IT
TABLE OF CONTENTS
7 INTRODUCTION •
9 TREASURY SERVICES
9 ACCOUNT RECONCILEMENT
9 AUTOMATED CLEARING HOUSE (ACH)
12 AUTOMATED CLEARING HOUSE (ACH) BLOCKS AND FILTERS
13 AUTOMATED CLEARING HOUSE (ACH) CUSTOMER-INITIATED PAYMENTS
13 CASHPAYOO
14 CHECKISSUANCE
15 CHECKTRUNCATION
16 CLIENT-PRINTED DRAFTS
17 COIN AND CURRENCY ORDERS
17 COLLECTION LETTERS
18 COMMERCIALAND CORPORATE CARD
23 COMMERCIAL DEPOSITS
24 COMMERCIAL PREPAID CARD
25 CONTROLLED BALANCE ACCOUNTS
26 CONTROLLED DISBURSEMENT
28 DISBURSEMENT IMAGE
28 ELECTRONIC BILL PAYMENT CONSOLIDATION
29 ELECTRONIC DATA INTERCHANGE (EDI)
30 ELECTRONIC FOREIGN EXCHANGE
32 INFORMATION REPORTING
33 LOCKBOX �
34 ONLINE STOP PAYMENT
35 POSITIVE PAY
37 RECLEAR
37 RE-PRESENTMENT CHECK (RCK)
38 TAX PAYMENTS
41 WIRE TRANSFER AND INTERNATIONAL ELECTRONIC FUNDS TRANSFERS
45 ELECTRONIC TRADE SERVICES
45 ADVISED STANDBY LETTERS OF CREDIT
46 COLLECTIONS
46 EXPORT LETTERS OF CREDIT
49 INFORMATION REPORTING
49 OPEN ACCOUNT
50 STANDBYAND IMPORT LETTERS OF CREDIT
52 SUPPLEMENTAL LIMITATION OF LIABILITIES AND INDEMNIFICATION FOR ALL ELEC-
TRONIC TRADE SERVICES
55 GENERAL PROVISIONS
55 CHANGES TO A SERVICE
55 COMMUNICATIONS
55 CONFIDENTIALIN
57 CURRENCY EXCHANGE RATES
58 FACSIMILE SIGNATURES
58 GENERAL MATTERS •
�
•
�
•
�
59
60
61
61
62
62
62
63
67
69
GOVERNING LAW
LIMITATION OF LIABILITIES
OVERDRAFfS
PAYMENT FOR SERVICES
PROTECTION FROM THIRD PARTIES
REPRESENTATIONS AND WARRANTIES
RESOLUTION OF DISPUTES
SOFfWARE LICENSE
TERMINATION
GLOSSARY OF TERMS
02004 by Bank of America Corporation
All rights reserved. None of the endosed material
may be reproduced or published without permission.
INTRODUCTION
Thank you for choosing the Bank of America Corporation group of financial institutions �
for your worldwide treasury management business needs. We appreciate the opportunity
to serve you. If you have any questions about our extensive array of treasury services
(including the locations where each service is available) or about this Booklet, please
contact your treasury services representative.
Capitalized terms used in this Booklet are defined in the Glossary. The terms "we", "us"
and "our" referto each ofthe BankofAmerica Corporation subsidiary bankswhich
provide you a particular Service under the terms of this Booklet. The terms "you" and "your"
refer to each Client identified on the Authorization and Agreement for Treasury Services.
This Booklet contains the terms and conditions under which we provide you worldwide
treasury services. It is used in conjunction with the Account Agreement which covers
account terms and conditions. Please read this Booklet carefully and keep it for your
records.
By signing and returning the Authorization and Agreement form in the front of this
Booklet, you agree to the General Provisions section of this Booklet (which contains
terms and conditions applicable to all Services), except that you agree to the Software
License Section of the General Provisions only to the extent we provide you Software in
connection with one or more Services. You also agree to those portions of the Treasury
Services and Electronic Trade Services sections of this Booklet which contain the specific
terms and conditions that relate to the Services we provide to you. If you would like an
additional Service, it will be covered by the terms and conditions of this Booklet once we �
have approved your use of the Service. You may begin using the Service when we have
received all required and properly executed forms and you have successfully completed
any testing or training requirements.
Whenever you use any of the Services covered by this Booklet, you agree to be bound by
these terms and conditions, as amended from time to time, and to follow the procedures
in the applicable Materials.
•
�
C�
�
�
0
TREASURY SERVICES
We offer a wide variety of treasury services. Each Service has many features and options.•
Your treasury services representative will be happy to describe these to you and to
recommend those that will best meet your needs.
A List of Banks and Services is enclosed with this Booklet. This list includes the names
of each Bank of America Corporation subsidiary bank offering Services under this Booklet
and the names under which we currently offer those Services. Please contact your
treasury services representative at any time if you wish to receive an updated list.
ACCOUNT RECONCILEMENT
OurAccount Reconcilement Services will help you reconcile and manage the credit and
debit activity in your accounts. Detailed information regarding such Services is available
in the applicable User pocumentation.
Your use of an Account Reconcilement Service does not affect any of your obligations,
which are described in the applicable Account Agreement, to discover and report with
respect to your accounts (including joint accounts where permitted): (i) unauthorized
signatures, alterations or endorsements on checks and (ii) unauthorized Requests and
other discrepancies. Your use of this Service or our receipt of information associated with
this Service does not increase our duty with respect to accounts or the payment of
checks.
AUTOMATED CLEARING HOUSE (ACH)
This section applies only to ACH Services within the United States of America and does
not apply to cross-border ACH transactions and other International Electronic Funds
Transfers which are covered by the "Wire Transfers and International Electronic Funds
Transfers" section in this Booklet.
Our ACH Services allow you to transfer funds to or from your accounts by initiating Entries
which may be sent through the ACH system or processed directly to accounts with us.
We may send Entries to any ACH processor selected by us or directly to another bank.
Each ACH Service is described in the applicable User pocumentation. You authorize us
to issue Depository Transfer Checks (DTCs), as instructed by you or as reasonably
determined by us to be appropriate. The capitalized ACH terms appearing in italics below
are defined in the NACHA Rules.
COMPLIANCE WITH NACHA RULES AND LAWS
You agree to comply with the NACHA Rules for all Entries, whether or not an Entry is sent
through the ACH network. You act as Originator and we act as Originafing Depository
Financial Institution (ODFI) with respect to Entries. You will de(iver Entries to us as
provided in the User pocumentation and the NACHA Rules. The NACHA Rules govern if
they conflict with this Booklet, except that the file specification requirements in the User
Documentation govern if they conflict with the NACHA Rules.
�
•
�
• Where a preauthorized debit Entry from a consumer's account varies in amount from the
previous debit Entry, you will comply with the notice requirements set forth in the NACHA
Rules, the Electronic Funds Transfer Act and Regulation E of the Board of Governors of the
Federal Reserve System, as applicable.
AUTHORIZED PERSONS
Before using an ACH Service, you give us a written list, in a form acceptable to us, of the
persons authorized by you to verify the authenticity of Entries and Reversal/Deletion
Requests in accordance with the Security Procedure and to perform certain other duties
in connection with such Service.
SECURITY PROCEDURE
You agree to use the Security Procedure, if any, when you deliver Entries or
Reversal/Deletion Requests to us. The purpose of the Security Procedure is to verify the
authenticity of Entries and Reversal/Deletion Requests delivered to us in your name and
not to detect any errors in the transmission or content of Entries. Each time you use a
Service, you represent and warrant that, in view of your requirements, the Security
Procedure is a satisfactory method of verifying the authenticity of Entries and
Reversal/Deletion Requests. You agree we may act on any Entries or Reversal/Deletion
Requests after we have verified its authenticity through use of the Security Procedure.
WARRANTIES
Each time you use an ACH Service, (i) you warrant that you have obtained appropriate
� authorization from each Receiver and that Entries conform to such authorization and
comply with the NACHA Rules, and (ii) you make the same warranties to us as we make
under Section 2.2 (or any successor section) of the NACHA Rules.
PAYMENT WITH RESPECT TO ENTRIES
We generally debit your account on the settlement date for credit Entries (including debit
Reversals), unless you are prefunding your Entries. Prefunding means that you are
required to pay for all credit Entries before the settlement date as we may specify. We
may, at our discretion, without prior notice to you, require prefunding before we process
your credit Entries. We are not obligated to process any credit Entries, even if we have
done so in the past, without having first been paid by you, but, if we do, the amount is
immediately due and payable without notice or demand.
You will pay us for the amount of any returned debit Entries (including rejected debit
Entries), any adjustment Entries or any returned DTCs, which we have previously credited
to your account. Such amounts shall be immediately due and payable. You agree that we
do not need to send a separate notice of debit Entries or DTCs which have been returned
unpaid. You may request reports containing information regarding returned debit Entries
and DTCs.
ACTING ON ENTRIES
We send Entries to the ACH processor for settlement on the Effective Entry Date shown
on the Entries, if we receive the Entries by the applicable processing deadlines specified
• in the User pocumentation for the ACH Service being used. We may treat Entries that we
receive for processing after a deadline as if received on the next Business Day. Entries
10
will be deemed received by us when we receive the complete file at the location •
specified in the User pocumentation.
REJECTION OF ENTRIES
We may reject any Entry that does not comply with the requirements of this Booklet or
the applicable User pocumentation, including any ACH processing limits described in the
User pocumentation, or that we are unable to verify through use of the Security
Procedure. We may also reject any Entry that may be returned for any reason under the
NACHA Rules or if you have breached your payment obligations for any ACH Service we
provide to you.
Notice of rejection will be given to you by telephone, by electronic means, by facsimile or
by mail within the time period specified in the User pocumentation and will be effective
when given. We are not liable for the rejection of any Entry and are not obligated to pay
you interest forthe period before you receive the notice of rejection. If an Entry is rejected
for any reason, it is your responsibility to correct the Entry you intend to resubmit.
REVERSAL OR DELETION
We have no obligation to cancel or amend any Entry after we have received it. If you send
us a Reversal/Deletion Request and we are able to verify the authenticity of the
Reversal/Deletion Request using the Security Procedure, we will make a reasonable effort
to act on your Reversal/Deletion Request. We will not be liable to you if such
Reversal/Deletion Request is not effected. You agree to indemnify us in connection with
any such Reversal/Deletion Request as provided in UCC 4A. Your obligations under this �
provision will survive the termination of any ACH Service.
PROVISIONAL PAYMENTS
You agree to be bound by the provision of the NACHA Rules providing that payment of a
credit Entry by the Receiving Depository Financial Institution (RDFI) to the Receiver is
provisional until the RDFI receives final settlement for the Entry. If final settlement is not
received, the RDFI is entitled to a refund from the Receiver of the amount credited. This
means that the Receiverwill not have been paid.
Our payment of any debit Entry, returned credit Entry or credit Reversal is provisional
until we receive final settlement for the Entry or Reversal. If final settlement is not
received, we are entitled to a refund and we may charge your account for the amount
previously credited. We may delay the availability of any amount credited for a debit
Entry or credit Reversal if we believe that there may not be sufficient funds in your
account to cover any chargeback or return of the Entry or Reversal.
INCONSISTENCY OF NAME AND NUMBER
An RDFI can make payment to a Receiver based solely on the account number, even if the
name in the Entry differs from the name on the account. We will send an Entry to an RDFI
based solely on the bank identifying number you provide, even if you provide us with a
different RDFI name.
•
11
• NOTICE OF ACCOUNT STATEMENT DISCREPANCIES
Information concerning Entries will be reflected in your account statements and, in some
cases, in the form of written or electronic advices or reports that are produced by one of
our Information Reporting Services. You must send us written notice, with a statement of
relevant facts, within 14 days after you receive the first notice or statement indicating a
discrepancy between our records and yours. If you fail to give the required notice, we will
not be liable for any loss of interest or for compensation for any other loss or cost
relating to an unauthorized or erroneous debit to your account or any other discrepancy
reflected in the notice or account statement. You must notify us promptly by telephone or
other electronic means approved by us for such purpose, and confirm such notice in
writing, of information concerning an unauthorized or erroneous debit to your account if
you learn about or discover it from any source other than a statement, advice or report
from us.
AUTOMATED CLEARING HOUSE (ACH) BLOCICS AND FILTERS
This section applies only to ACH Blocks and Filters Services for Entries received in the
United States of America.
With the ACH Blocks and Filters Services, you provide us with the authorization criteria
for Entries you desire to receive for debit or credit to your account. We will automatically
return any Entry which does not meet your authorization criteria.
� We may also return an Entry that would be returned for any reason under the NACHA
Rules. The ACH Blocks and Filters Services do not apply to transactions between you and
us, and we may pay Entries which you have authorized us to originate against your
account (e.g., loan or credit card payments), whether or not you have included these in
your authorization criteria. We may also pay any Entries, reversals or adjustments which
we are required to accept under the NACHA Rules, operating circulars or any other
applicable rule, guideline or regulation.
You provide authorization criteria in a manner and form acceptable to us. In your
authorization criteria you may specify a maximum amount for authorized Entries, in
which case you must specify the amount in dollars and cents.
You agree to comply with the NACHA Rules for all Entries. Under the NACHA Rules, credit
Entries are provisional and may be revoked prior to final settlement. If the credit Entry is
revoked before final settlement and final settlement is not received, we may charge your
account for any amount previously credited to your account. The person who originated
the credit Entry is considered not to have paid you. If this happens, we do not send a
separate notice.
If an ACH Blocks and Filters Service is terminated for any reason, we will no longer be
obligated to monitor Entries against your authorization criteria and will receive and
accept or return Entries to your account in accordance with our normal procedures. You
still have the right to return Entries in accordance with the NACHA Rules.
�
12
AUTOMATED CLEARING HOUSE (ACH) CUSTOMER-INITIATED PAYMENTS
CASHPAYO
Our ACH Customer-Initiated Payments service allows your consumer or business
customers to pay you for goods or services by using your website. Your customers can
authorize payments to you through commands on your website or by touch-tone or voice
commands on the telephone. Detailed information regarding this Service is available in
the applicable User pocumentation.
Payments will be made by creation of an ACH Entry to credit your account with us and will
be subject to the provisions of our Automated Clearing House Services. You act as the
Originator, your customer acts as the Receiver and we act as the ODFI with respect to the
Entries. You warrant that you have obtained appropriate authorization from each Receiver
and that Entries conform to such authorization and comply with the NACHA Rules. You
also make to us the same warranties as we make with respect to Entries under the
NACHA Rules.
Our CashPayO Service allows you to pay your employees and other payees by directly
depositing payments to their CashPay accounts. Your payees can immediately access
their money through ATMs and point of sale (POS) terminals.
CASHPAY FUNDING OPTIONS
You may fund the CashPay accounts in one of two ways: by initiating Entries through the �
Automated Clearing House (ACH) system or, upon our approval, by instructing us to
transfer funds from a deposit account you maintain with us. (ACH Services are governed
by the ACH section of this Booklet.)
If you choose to pay by the transfer of funds from your account with us, we will debit your
account following receipt of your payment instructions in a mutually agreed-upon format
and method. You must have sufFicient Collected and Available Funds in your account to
cover the transfer amount. In the event that sufficient funds are not available at the time
of settlement, you agree that we may take steps to protect ourselves, including refusing
to fund CashPay accounts and terminating the CashPay Service (which will not affect
funds previously transferred to CashPay accounts), without incurring any liability to you
or your payees.
CERTIFICATION OF ENROLLMENT INFORMATION
You must provide us information for each payee who wishes to open a CashPay account.
Each time you provide us with such information or initiate a transfer of funds to a
CashPay account, you certify that the following statements are true and accurate as of
such date:
• The payee is entitled to receive payments issued by you, and is otherwise qualified to
participate in the CashPay program.
• All information provided by you about the payee is correct, including but not limited to
the payee's date of birth, address, and social security number or other identifying •
13
�
information contained in another form of identification issued by a governmental
entity.
• If the payee is to receive wage payments through a CashPay account, the payee is
legally employable in the United States ofAmerica.
• You have provided the payee the explanatory CashPay Service information that we
have provided to you for that purpose, and the payee has authorized the transfer of
wages to the CashPay account.
• The payee has not cancelled the authorization to transfer the wages to the CashPay
account.
You agree to notify us promptly of any changes to the payee enrollment information you
have provided to us for this Service.
ADDITIONAL LIMITATION OF LIABILITY
As a general rule, ATMs cannot dispense cash in increments other than $5, $10 or $20.
This means that your payees may not be able to withdraw at an ATM all funds paid by you
to the payees' CashPay accounts. We will wire the difference to any payee who requests
such payment; however, we will not be responsible if your payees or others assert a
claim against us due to this inability to withdraw all funds at an ATM.
PROMOTIONAL MATERIALS
� We will provide you with a CashPay agreement and other explanatory documentation for
you to give your payees. You must obtain our prior written consent if you elect to promote
the CashPay service using materials (in any format) other than the documentation we
provide to you for that purpose.
CHECK ISSUANCE
With our Check Issuance Services, you may request us to create checks on your behalf
that are drawn on either (i) accounts maintained by you with us or another bank or (ii)
accounts designated and owned by us.
AUTHORIZED PERSONS
Before using a Check Issuance Service, you give us a written list, in a form acceptable to
us, of the persons authorized by you to perform certain duties in connection with such
Service.
SECURITY PROCEDURE
You agree to use the Security Procedure when you deliver Check Issuance Requests or
electronically transmit Stop Payment Requests to us. The purpose of the Security
Procedure is to verify the authenticity of Check Issuance Requests and Stop Payment
Requests delivered to us in your name and not to detect any errors in the transmission or
content of these messages. Each time you use a Check Issuance Service, you represent
and warrant that, in view of your requirements, the Security Procedure is a satisfactory
• method of verifying the authenticity of Check Issuance Requests and such Stop Payment
Requests. You agree we may act on any Check Issuance Request and any electronically
14
transmitted Stop Payment Request the authenticity of which we have verified through �
use of the Security Procedure.
STOP PAYMENT REQUESTS
Generally, you may send us a Stop Payment Request with respect to a check drawn on an
account designated and owned by us only if the check is lost, stolen or destroyed. In
such case, you must complete and provide us with a declaration of loss and indemnity
agreement reasonably acceptable to us. If you wish to stop payment on a check drawn on
an account you maintain with us, you must make your request as provided in the
applicable Account Agreement.
YOUR RESPONSIBILITIES
You must create and transmit to us a Check Issuance Request for each check you want
us to issue on your behalf. You must make certain that each Check Issuance Request
conforms in form and substance to the requirements, including cutoff times on a
Business Day, described in the applicable User pocumentation.
You must retransmit any Check Issuance Request or other message initially transmitted
to us through a Service if you have not received an acknowledgment message from us
within the time period specified in the applicable User pocumentation.
In the case of checks drawn on accounts designated and owned by us, you must ensure
that Collected and Available Funds, sufficient to cover the total of all checks issued, are
on deposit in your accounts. We will debit your account to cover such checks when we
receive your Check Issuance Request. In the case of checks drawn on accounts designated �
and owned by you, you will be governed by the applicable Account Agreement.
CHECK TRUNCATION
With ourCheckTruncation Service, we store copies ofyourcanceled checks on microfilm
or other media and destroy the checks. You do not receive your canceled checks. We will
provide a copy of any check that you request for up to seven years from the date the
check was paid against your account. To request a copy, you must provide us with
sufficient information for us to identify the item, including the Magnetic Ink Character
Recognition (MICR) serial number, account number, exact amount (dollars and cents) of
the check, statement reference number, if any, and posting date. We may also ask you
for additional identifying information.
Special services such as micro�lm or review of dates, dollar amounts, serial numbers or
signatures may not be available in connection with the Service.
Notwithstanding the Limitation of Liabilities section of this Booklet, if we are unable to
provide a copy of a check as requested by you under a Service, our liability will be limited
to your actual damages but will not, in any event, exceed the amount of the check.
•
15
�
�
•
CLIENT PRINTED DRAFTS
With our Client-Printed Drafts Services, you use your computer (using Software we
provide or by accessing our treasury management website) to print drafts (which may
include drafts denominated in a currency otherthan the currency in which the relevant
account is denominated) drawn on either (i) accounts maintained by you with us or
another bank or (ii) accounts designated and owned by us.
AUTHORIZED PERSONS
Before using a Client-Printed Drafts Service, you give us a written list, in a form
acceptable to us, of the persons authorized by you to perform certain duties in
connection with such Service.
SECURITY PROCEDURE
You agree to use the Security Procedure when you deliver Payment Advices or electronically
transmit Stop Payment Requests to us. The purpose of the Security Procedure is to
verify the authenticity of Payment Advices and Stop Payment Requests delivered to us in
your name and not to detect any errors in the transmission or content of these messages.
Each time you use a Client-Printed Drafts Service, you represent and warrant that, in view
of your requirements, the Security Procedure is a satisfactory method of verifying the
authenticity of Payment Advices and such Stop Payment Requests. You agree we may act
on any Payment Advice or electronically transmitted Stop Payment Request the
authenticity of which we have verified through use of the Security Procedure.
STOP PAYMENT REQUESTS
Generally, you may send us a Stop Payment Request with respect to a draft drawn on an
account designated and owned by us only if the draft is lost, stolen or destroyed. In such
case, you must complete and provide us with a declaration of loss and indemnity
agreement reasonably acceptable to us. If you wish to stop payment on a draft drawn on
an account you maintain with us, you must make your request as provided in your
Account Agreement.
YOUR RESPONSIBILITIES
You must verify the contents of each shipment of blank draft stock and sign and return
to us the receipt accompanying each shipment or notify us of any discrepancy. You must
notify us immediately if any draft stock is lost or stolen. You will be liable for any
damages arising out of the loss or theft of any draft stock received by you.
You must create and transmit to us a Payment Advice for each draft you issue using a
Service. You must make certain that each draft, Payment Advice and electronically
transmitted Stop Payment Request conforms in form and substance to the requirements,
including cutofftimes on a Business Day, described in the applicable User
Documentation.
You must retransmit any Payment Advice, electronically transmitted Stop Payment
Request or other message initially transmitted to us through a Service if you have not
received an acknowledgment message from us within the time period specified in the
applicable User pocumentation.
16
OUR RESPONSIBILITIES
When we receive the Payment Advice, we will transfer funds from your account with us to �
the bank account on which the draft is drawn.
We wi(l provide you with blank draft stock and with the necessary Software and/or access
to our treasury management website.
PAYMENT WITH RESPECT TO DRAFTS
You agree you will not issue any drafts using a Service which would cause your
applicable account balance, according to your records, to be exceeded. If your records
and ours disagree regarding the account balance, our records will control for purposes of
these Services. You must ensure that Collected and Available Funds, sufficient to cover
the total of all drafts issued, are on deposit in your account each Business Day before the
time stated in the applicable User pocumentation.
COIN AND CURRENCY ORDERS
Our Coin and Currency Order Services allow you to place orders for coin and currency
with our cash vaults and, where available, to exchange paper currency for rolled coins
and currency at certain banking centers or our automated business centers.
Before using a Coin and Currency Order Service, you give us a written list at our request,
in a form acceptable to us, of the persons authorized by you to place coin and currency
orders and to perform certain other duties in connection with a Service. �
If you pick up your coin and currency order from one of our cash vaults, you must
contract separately with an armored carrier service that is acceptable to us to provide for
the transportation of cash orders. Armored carriers are your agents.
You authorize us to act upon any request for coin or currency made in accordance with
this Booklet and the procedures described in the applicable User pocumentation.
In connection with any coin and currency you order from our cash vaults using a Service,
you authorize us to debit your account on the day the coin and currency order is released
to your authorized agent or to the depository facility you and we have agreed upon. Each
time you use a Coin and Currency Order Service, you represent and warrant with each
coin and currency order that you have sufficient Collected and Available Funds in your
account which, when added to funds that are available under a line of credit, are
sufficient to cover your coin and currency order. We have no obligation to release a coin
and currency order unless there are sufficient Collected and Available Funds in the
designated account and available under a line of credit to pay for such order at the time
scheduled for release of the cash to you or your agent.
COLLECTION LEITERS
Our Collection Letter Services allow you to forward us drafts, checks and travelers checks
(as used in this section, "items") drawn on Canadian banks and denominated in U.S.
�
17
• dollars or drawn in specified foreign currencies (as described in the applicable User
Documentation) for collection.
You must prepare and forward a transmittal letter, in a form acceptable to us, along with
those items you want us to process for collection in accordance with the applicable User
Documentation. You agree that you will only request collection on items which are drawn
on Canadian Banks in U.S. dollars or foreign currency items drawn in currencies specified
in the applicable User pocumentation.
We will send each item you forward to us for collection to the bank on which such item
was drawn or to an appropriate correspondent bank. We will credit your account for each
item on the Business Day on which we receive payment for each such item at our then-
prevailing buy rate for the applicable currency. We will deduct all service fees and
charges, plus any correspondent bank fees and charges, from the amount of any
payment credited to your account for such items.
We will send you a written advice showing the applicable buying rate and fees and
charges for each item we process as a collection item through use of a Collection Letter
Service.
COMMERCIAL AND CORPORATE CARD
Our Commercial and Corporate Card Services allow you to open Card Accounts for your
� business purposes, as described below. With our Commercial Card Services, which are
designed principally for medium-sized companies, you may obtain a single Card for
managing purchases, travel and fleet spending. With our Corporate Card Services, which
are designed for targe companies, you may obtain separate purchasing, travel or fleet
Cards or a Card combining all three functions. Detailed information regarding such
services is available in the applicable User pocumentation.
OUR OBLIGATIONS
We will open Card Accounts upon your request which Cardholders may use to conduct
Transactions for your business. We will assume that all Transactions made on a Card
Account are authorized by you until we receive and have had a reasonable period of time
to act upon written notice from you that the Cardholder is no longer authorized to use
the Card, Convenience Checks or the Card Account. Pursuant to your instructions, each
Card Account we open shall have one or more of the following features:
• travel and entertainment
• purchasing
• fleet/automotive
We may also provide Convenience Checks on your request with respect to your Card
Accounts. We can also establish a Card Account for which we assign only a Card
Account number, but we do not issue a Card or Convenience Checks. If you so request,
• we will provide to the Cardholder, at the address you or the Cardholder specifies, a
monthly billing statement reflecting the use of the relevant Card Account. We may deny
18
authorization of any Transaction if we suspect fraudulent activiry or Unauthorized Use �
or for any other reason. Notwithstanding anything to the contrary in the "Limitations of
Liability" section ofthis Booklet, we will not be liable for any failure to authorize a
Transaction.
YOUR OBLIGATIONS
You shall use each Card Account solely for your business purposes.
You shall pay for each Transaction, regardless of its purpose or whether you signed a
sales draft or received a receipt, in addition to our fees and charges.
You represent and warrant to us that each cardholder is a current employee or agent of
your company. You will promptly furnish such financial and other information as we
request for the purpose of reviewing your ability to perform your obligations to us. You
represent and warrant to us that all such information about your employees, agents, or
your company is accurate, sufFiciently complete to give us accurate knowledge of your
financial condition and in compliance with all applicable rules, regulations and laws.
You and each Cardholder will check to ensure that the information embossed on each
new Card or printed on each Convenience Check is correct, and you will contact us
immediately if there is an error.
CHARGE LIMITS
We will give you one total charge limit for all your Card Accounts. We will also assign an
individual charge limit for each Card Account. We may increase or decrease the total �
charge limit or any individual limit at our discretion. You agree not to incur obligations
which would cause the total charge limit for all your Card Accounts to be exceeded. If you
do exceed this limit, or if any Cardholder's individual charge limit is exceeded, we may
deem the entire balance owing to be immediately due and payable, and/or we may
refuse any Transactions on all Card Accounts or the individual Card Account until a
payment is made to reduce the balance below the total charge limit or the individual
charge limit.
TRANSACTIONS IN OTHER CURRENCIES
MasterCardO or VisaO will convert to U.S. Dollars any charge made in a currency
other than U.S. Dollars at a rate determined under MasterCard or Visa regulations, as
applicable. The conversion rate may be different than the rate in effect on the date of
the Transaction. We will post to the Card Account the converted U.S. Dollar amounts.
DISPUTES WITH MERCHANTS AND SUPPLIERS
We will have no liability for goods or services purchased with, or for a merchant's or
supplier's failure to honor purchases made with, a Card Account, Convenience Check or
Card. You agree to make a good faith effort to resolve any dispute with a merchant or a
supplier arising from a Transaction. In a dispute with a merchant or supplier, we will be
subrogated to your rights and each Cardholder's rights against the merchant or supplier
and you will assign (and cause the Cardholder to assign) to us the right to assert a billing
error against the merchant or supplier. You will, and will cause the Cardholder to, do •
whatever is necessary to enable us to exercise those rights. We may reverse from any
Card Account any Transactions relating to the dispute.
19
• A merchant or supplier may seek prior authorization from us before completing a
Transaction. If you advise us in writing that you desire to restrict Transactions to
merchants falling within certain categories we designate in our User pocumentation, we
will take reasonable steps to prevent authorization of Transactions from other types of
merchants. We, however, will not be liable to you if inerchants or suppliers nonetheless
accept a Card, Convenience Check or Card Account for other types of Transactions, or if
authorization for a Transaction is not given.
CONVENIENCE CHECKS
If we provide Convenience Checks with regard to a Card Account, they may not be used
to make payment on the Card Account. We may pay a Convenience Check and post its
amount to the Card Account regardless of any restriction on payment, including a
Convenience Check that is post-dated, that states it is void after a certain date or that
states a maximum or minimum amount for which it may be written. Once paid,
Convenience Checks will not be returned to you or the Cardholder.
If you wish to stop payment on a Convenience Check, you must call us at the customer
service number shown on your billing statement and provide such information as we
request or is required under the relevant User pocumentation. We will stop payment if we
receive your request on or before the Business Day before the Business Day on which we
would otherwise pay the Convenience Check. The date on which we would pay a
Convenience Check may be prior to the date it would post to your Card Account. A stop
� payment order will remain in effect for up to six months.
CARDLE55 ACCOUNTS; ACCOUNTS NOT IN NAME OF INDIVIDUAL
If you use our Corporate Card Services, we may, at your request, establish a Card Account
for which no Card is issued or establish a Card Account with a designation which is not
an actual individual, including, without limitation, designation of a vehicle identification
number, license number, department name or "Authorized Representative" on the Card
Account. Notwithstanding any other term in this Booklet, you agree to be solely
responsible for the use of any such Card Account, including, without limitation, any
Unauthorized Use, and you agree not to make any claim or request related to any
Unauthorized Use of such a Card Account.
PAYMENT OF CARD ACCOUNTS; SECURITY INTEREST
We will provide to the Card Administrator, or other person you designate in writing to us,
a monthly billing statement which will identify each Transaction posted during the billing
cycle and the date of the Transaction. Unless otherwise determined by us, the officiat
billing statement will be in paper, not electronic, form. The billing statement will also list
any applicable fees and charges for the Services. If you have requested a Card Account
for travel and entertainment Transactions, we will provide an additional copy of the
monthly billing statement covering such use of the relevant Commercial Card to the
appropriate Cardholder at the address which you or the Cardholder provides to us.
You will pay to us the total amount shown as due on each billing statement on or before
• the due date shown on the statement. If you do not make a payment in full by the
specified due date, in addition to our other rights, we may assess a late fee and finance
zo
charge as set forth in our schedule of fees and charges. You have no right to defer any �
payment due on any Card Account.
Unless otherwise agreed by us, payments must be made using an ACH service. As
specified by you, we may initiate ACH debits to any deposit account at any financial
institution. All payments must include the complete Card Account number in order to be
processed and for you to be credited with making payment. If you arrange for direct
payment by Cardholders, such an arrangement will not change your responsibilities
under this Booklet, including your obligation for payment.
You grant to us a security interest and contractual right of setoff in and to all deposits
now or subsequently maintained with us or any of our a�liates or Subsidiaries. In
connection with that grant, you authorize us to enter into a master control agreement
with our affiliates authorizing, upon the occurrence and continuance of any default, the
disposition of any such deposits to satisfy all liabilities incurred in connection with
these Services, without your further consent. The grant of this security interest shall
survive termination of these Services.
LOST OR STOLEN CARDS; UNAUTHORIZED USE
In the event of a possible loss or theft of a Card, Convenience Check or Card Account
or possible Unauthorized Use, you will give us notice by telephone or telefax to the
numbers set forth in the User pocumentation. You agree to give us this notice as soon as
practicable but in any event within 24 hours after discovery of the known or suspected
loss or theft or Unauthorized Use. If notice as provided in this paragraph is given within �
the first 24 hours and you assist us in investigating facts and circumstances relating to
the loss, theft or possible Unauthorized Use, including without limitation obtaining an
affidavit or similar written, signed statement from the Cardholder, then you will not be
liable for Transactions resulting from Unauthorized Use. If we have issued fewer than ten
Card Accounts to you, your liability for Transactions by a person who does not have actual,
implied or apparent authority to use the Card or Convenience Check and whose use does
not result in a direct or indirect benefit to you will not exceed $50 on each Card.
LICENSE TO USE YOUR MARKS
Upon your request, we may place your trademark, tradename, service mark and/or
designs ("Company's Marks") on the Cards and collateral materials. You will provide the
graphics to us in sufficient time to allow for review and approval by us and, if necessary,
the respective card association. You grant to us a non-exclusive license to use, during
the term of the Services, Company's Marks on the Cards and on other materials related
to the Card Accounts. Your indemnity under the "Protection from Third Parties" section of
this Booklet covers any claim that the use of any Company Marks infringes the
intellectual property right of any third party.
EXTENSION OF CORPORATE CARD SERVICES TO AFFILIATES
Upon your request and submission of a Participant Account form, we may approve one
or more affiliates of which you are majority owner for participation in the Corporate Card
Services. Each participating affiliate will have the same rights and obligations as you •
21
• except that no separate charge limit will be assigned. Your charge limit will apply to
Transactions on all Card Accounts, including those of your participating affiliates.
You may terminate an affiliate's participation by giving us written notice and a
reasonable time to act on such notice. If an approved participant is, or will no longer
be, majority-owned by you, you agree to notify us immediately, and we may immediately
terminate the Card Accounts of such participant.
SUPPLEMENTAL GOVERNING LAW AND RESOLUTION OF DISPUTES PROVISIONS
Notwithstanding anything to the contrary in the Governing Law provision in the General
Provisions section of this Booklet, the Commercial and Corporate Card Services are
governed by the laws respecting national banking associations and, to the extent not
covered by those laws, by the laws of the State of Arizona, without reference to that
state's principles of conflicts of law, regardless of where you reside or where a
Cardholder uses a Card Account.
Notwithstanding anything to the contrary in the Resolution of Disputes provision in
the General Provisions section of this Booklet, you agree to submit to the personal
jurisdiction of any state or federal court in Arizona and to binding arbitration in Arizona
with respect to disputes regarding the Commercial and Corporate Card Services.
ADDITIONAL TERMINATION PROVISIONS
We may immediately terminate these Services if there occurs (i) a termination event set
� forth in the "Termination" section of this Booklet with respect to you, a participating
affiliate or a guarantor of obligations under any Card Account, (ii) a change in your
ownership, if you are a privately-held entity, in excess of 50% or (iii) any of the following
with respect to you, a participating a�liate or a guarantor of obligations under any Card
Account:
• the failure to pay or perform any obligation, liability or indebtedness to us or any of
our affiliates or subsidiaries, whether under this Booklet or any other agreement, as
and when due (whether upon demand, at maturity or by acceleration);
• the failure to pay or perform any other obligation, liability or indebtedness to any
other party;
• death (if an individual) or resignation or withdrawal of any partner or material owner
(of a privately-held entity);
• merger or consolidation with or into another entity;
• the determination by us that any representation or warranty made to any of our
affiliates or subsidiaries in any agreement is or was, when it was made, untrue or
materially misleading;
• the failure to timely deliver such financial statements, including tax returns, other
statements of condition or other information, as we shall request from time to time;
• • the entry of a judgment which we deem to be of a material nature;
22
• the seizure or forfeiture of, or the issuance of any writ of possession, garnishment or •
attachment, or any turnover order for any property;
• the determination by us that we are insecure for any reason;
• the determination by us that any such person fails to meet credit criteria initially used
by us to approve the Card Services; or
• the failure to comply with any law or regulation controlling its operation.
Upon any termination of the Card Services, (i) the entire balance outstanding on all Card
Accounts shall, at our option, become immediately due and payable and (ii) you will
immediately destroy, and will instruct all Cardholders to immediately destroy, all Cards
and Convenience Checks. Your responsibility to pay for all Transactions regarding each
Card Account will continue until a reasonable period of time after you notify us to close
the Card Account or until you pay for all Transactions entered into before we close the
Card Account to future use, whichever occurs later. After termination, you and all
Cardholders will make no new Transactions on any Card Account. If, however, such
Transactions are made, you will be liable for each of them.
COMMERCIAL DEPOSITS
With our Commercial Deposits Services, you may make deposits of coin and currency,
checks and other payment instruments at one of our designated banking centers (which
may include an automated business center), depository facilities (which may include a�
night depository facility), processing centers or cash vaults. If these deposits are -
delivered by you or your agent before the cutoff time specified in the applicable User
Documentation, we will give you same-day provisional credit for such deposits, subject
to later verification by us and our availabiliry schedule. Banking center deposits that are
immediately verified are covered under your Account Agreement.
YOUR RESPONSIBILITIES
You agree to prepare all deposits accurately and in good faith and to follow the
procedures for preparation, packaging and delivery of deposits as provided in the
applicable User pocumentation.
For deposits made to an automated business center, you will automatically be provided a
receipt. In all other cases, in order to receive a receipt of deposit, you must provide a
duplicate deposit slip in addition to the number of original deposit slips required by us
to process the deposit. We will stamp this duplicate deposit slip and return it to you. In
all cases, deposits are subject to later verification by us.
If you use an armored carrier to transport your deposits, you must contract separately
with an armored carrier service that is acceptable to us. For deposits made to one of our
cash vaults, we may require that you use an armored carrier. Armored carriers are your
agents.
•
23
u
�
�
OUR RESPONSIBILITIES
We receive your deposit and issue provisional credit to your account for the amount you
declare on the deposit slip. The declared amount is subject to later verification by us.
If we �nd an error when we verify your deposit, we will debit or credit the amount of the
error to the deposit account listed on the deposit slip, unless you and we have agreed
othen�vise in writin�; provided, however, we reserve the right to set a standard
adjustment amount (which we may change from time to time), in which case we will not
make a correction to a deposit when the error is less than our current adjustment amount.
We give you same-day provisional credit for deposits delivered before the cutoff time on
a Business Day. For deposits delivered after the cutoff time or on a non-Business Day, we
give you provisional credit on the next Business Day.
COMMERCIAL PREPAID CARD
Our Commercial Prepaid Card Services enable you to distribute Commercial Prepaid
Cards to your employees and others that permit them access to a predetermined amount
of funds. Commercial Prepaid Cards may be used to withdraw cash at any ATM displaying
any of the logos displayed on the Commercial Prepaid Card and to make purchases at
any merchant displaying the Visa logo. Detailed information regarding such services is
available in the applicable User pocumentation.
OUR OBLIGATIONS
We will issue Commercial Prepaid Cards to you on your request after you have provided
us such information regarding the Commercial Prepaid Card as we may require at that
time. Before we issue each Commercial Prepaid Card, we will debit funds from a deposit
account you maintain with us for the value amount of the Commercial Prepaid Card
issued.
We will mail the Commercial Prepaid Cards to the address or addresses you provide us,
together with a copy of the agreement between us and the Cardholder, our privacy policy
for consumers (if applicable) and instructions for activating the Commercial Prepaid
Card.
We will deduct the amount of each Transaction, which may include fees added by the
ATM owner or the applicable network, from the value amount with respect to the
Commercial Prepaid Card. We will also deduct applicable Cardholder fees.
You may request us to add value to previously issued Commercial Prepaid Cards by
providing such information as we may require at that time. Upon receipt of your request
and the required information, we will debit your deposit account with us for the amount
to be added to the existing Commercial Prepaid Cards.
If there are insu�cient Collected and Available Funds in your account, we have no
obligation to issue or activate any Commercial Prepaid Card or to add value to any
existing Commercial Prepaid Card.
24
COMMERCIAL PREPAID CARD CREATION
All Commercial Prepaid Cards shall identify us as the issuer and shall include such other
names and trademarks as we require. If you elect to customize the Commercial Prepaid
Cards, you will be responsible for any additional costs in the design or production of the
Commercial Prepaid Cards. You will provide graphics, promotional material and wording
to us for review and approval and you must comply with all the rules of Visa USA, Inc.
and other systems or organizations, as applicable. You will allow us to use your artwork
on the Commercial Prepaid Cards, provided that you shall have first reviewed and
approved such use. You will indemnify and hold us harmless from any and all liabilities,
claims, costs, expenses and damages of any nature (including Legal Expenses) arising
from any daim that the artwork you supplied infringes the intellectual property rights of
any third party.
COMMERCIAL PREPAID CARD ACTIVATION
Each Cardholder will be instructed to call a toll-free (in the U.S.A.) number and use an
interactive voice response system to authenticate the Cardholder by using a number
unique to the Cardholder in order to activate the Commercial Prepaid Card. During this
call, the Cardholder will receive their PIN, if applicable. The Cardholder can change the
PIN at that time to any four digit number. Once the call is successfully completed, the
Commercial Prepaid Card will be activated. You will be responsible for informing each
Cardholder of any other restrictions you may impose on the use of the Commercial
Prepaid Card, and we will not have any responsibiliry for enforcing those restrictions.
COMMERCIAL PREPAID CARD USAGE �
We may refuse to issue or add value to any Commercial Prepaid Card if we believe the
Commercial Prepaid Card will or may be used in violation, or may cause us to be in
violation, of any law or regulation, or any rule of any payment system.
We will use reasonable efforts to prevent any overdraft with respect to a Commercial
Prepaid Card or any unauthorized use of a Commercial Prepaid Card, but cannot ensure
we will be able to do so. You will reimburse us for the amount of any overdraft or for the
amount of any loss resulting from such unauthorized use.
The value amount on any Commercial Prepaid Card does not constitute a deposit
account, is not insured by the Federal Deposit Insurance Corporation or any other
government agency, and does not accrue interest for your benefit or the benefit of the
Cardholder.
CONTROLLED BALANCE ACCOUNTS
Our Controlled Balance Accounts Services let you control the transfer of funds between
accounts with us. These Services may be restricted to certain account types.
Transfers you make from a U.S.-domiciled money market account using these Services
are considered preauthorized transfers, are counted toward the number of transactions
you are legally permitted each month, and may not be made to a checking account with
an overdraft credit facility. �
25
• You may instruct us to make either date-related (where available) or balance-related
(where available) transfers as described below. Once you instruct us to transfer funds
between accounts, transfers begin on a mutually agreeable date or, for accounts
domiciled in the United States of America, either immediately or on the date you specify.
With a date-related transfer, funds can be transferred in either direction between certain
types of accounts on the date and in the amount you specify. Both interstate and
intrastate funds transfers are permitted as long as you meet the requirements for the
account type(s), transfer date and account location(s). If the transfer date you specify is a
non-Business Day, we make the transfer on the next Business Day.
With a balance-related transfer, you may have funds transferred to an account when the
balance falls below a certain amount, or from an account, when the balance rises above
a certain amount, or both. We transfer the amount required to meet the account balance
you specify.
You may elect to have funds transferred to or from accounts of another company/
organization using a Service. You agree that for each such account, the company/
organization will provide us with its written authorization, in a form acceptable to us, for
such transfers. However, you do not need to provide us such written authorization if (i)
the other company's accounts are domiciled in the United States of America and (ii) you
represent and warrant that such other company is a U.S. Subsidiary and that it has
authorized us to transfer funds between its accounts and your accounts.
�
CONTROLLED DISBURSEMENT
Our Controlled Disbursement Services provide information to you each Business Day so
that you can fund the total amount of (i) controlled disbursement checks presented that
Business Day and (ii) where the option is available, controlled disbursement ACH debits
and any other electronic debits to which we agree and which are posted that Business
Day.
ACCOUNTS
We make the Controlled Disbursement Services available through multiple Controlled
Disbursement Points in different parts of the United States of America. These Points are
identified on the List of Banks and Services. Subject to our approval in each case, you
may use such Service through one or more of those Points. For each Controlled
Disbursement Point you use, you maintain one or more Deposit Accounts with us.
For certain Controlled Disbursement Points, as more fully described in the applicable
User pocumentation, you may (i) draw checks bearing those respective Points' routing
numbers directly on a Deposit Account and (ii) where the option is available, initiate or
authorize third parties to initiate ACH debits and, subject to special agreement, other
electronic debits to the Deposit Account. (For electronic debits to a Deposit Account, you
must use the appropriate funds transfer Service approved by us.)
• For a certain other Controlled Disbursement Point, we authorize you to draw checks on
accounts we maintain at such Point, then we debit your Deposit Account(s) in the
26
amount(s) of the checks which are paid. With these Services, you have no account or
contractual relationship with such Controlled Disbursement Point. You will not access our
accounts maintained at such Point in any other manner, including but not limited to
automatic debit arrangements cleared through an automated clearing house network or
through wire transfers.
On each Business Day, we will inform you by the time specified in the applicable User
Documentation of the total amount of debits presented for payment that day at or
through a Controlled Disbursement Point and any other amounts required to be
deposited in the corresponding Deposit Account(s) to cover such debits. On each such
Business Day, priorto the time stated in the applicable User pocumentation, you must
ensure that sufficient Collected and Available Funds are on deposit in the Deposit
Account(s) to cover such amounts. If we attempt to post a debit to a Deposit Account for
the amount due and determine there are insufficient funds in the Deposit Account, we
may dishonor or instruct the pertinent Controlled Disbursement Point to dishonor some
or all of the checks then pending payment and/or, as appropriate, return or reject any
electronic debit pending settlement. We may, however, in our sole discretion, allow an
overdraft so some or all of such checks or electronic debits will be paid or settled. If we
do so, we are not obligated to allow any such overdraft in the future.
If, for any reason, we fail to provide you timely notice of the required funding amount for a
Deposit Account, and if you fund such Deposit Account according to the procedures
(including funding amount and time) described in the applicable User pocumentation, we�
will post to the Deposit Account, or instruct the Controlled Disbursement Point to
post to your account, all checks presented for payment, and electronic debits received for
settlement, that day. If the required funding amount nonetheless exceeds the amount
funded by you and you have insufficient funds in the Deposit Account to cover the required
amount, we will overdraw the Deposit Account and advance funds to cover the excess.
If we advance our own funds, repayment is immediately due and payable, and you will
repay us on or before the next Business Day along with interest on such funds as
specified in our schedule of charges for business account services or as otherwise
agreed. If you do not, we may dishonor, or instruct the Controlled Disbursement Point to
dishonor, some or all of the checks then pending final payment and/or, as appropriate,
return or reject any electronic debit pending settlement even if the Deposit Account has
sufficient Collected and Available Funds to cover such debits.
We may require you to maintain a specified minimum amount in any Deposit Account for
which we permit you to use automated clearing house transfers to fund that Account.
If you use facsimile signatures on checks drawn on an account at a Controlled
Disbursement Point, your use of such signatures is subject to the Facsimile Signatures
section of this Booklet.
STOP PAYMENTS
You may request stop payments on checks drawn under a Controlled Disbursement
Service by following the procedures specified in the applicable User pocumentation or •
applicable Account Agreement. Also, you may use an Online Stop Payment Service,
27
• which is subject to the Online Stop Payment section of this Booklet. If you use
telephone, mail or facsimile transmission to request a stop payment, you agree that
your stop payment request is subject to Che terms described in the Account Agreement
for requesting stops by telephone or mail.
If some, but not all, of the information in your stop payment request matches a check
which has been presented for payment (for example, the Magnetic Ink Character
Recognition (MICR) serial numbers match and the dollar amounts do not match), we may
contact you to request a decision on whether or not to pay the check. If any such suspect
check is not to be paid, you must promptly instruct us not to pay, or to direct a Controlled
Disbursement Point not to pay, the suspect check. If you do not, the suspect check may
be paid.
DISBURSEMENT IMAGE
Our Disbursement Image Services will make available to you digital images of checks and
drafts paid against specified accounts. Such images may be made available to you by
online transmission or by CD-ROMs containing images you may access using image
CD-ROM Software.
Check and draft images will be made available to you at such times as you request and
we agree. If an image of a check or draft is missing or is illegible, we will provide you a
microfilm copy upon your request. Your request must include the account number, the
. check serial number, the exact amount (dollars and cents) of the payment and the date
the payment was made. We may assess a fee for copies provided to you. We will not be
liable for failure to provide copies by a given time or for failure to provide copies we are
not reasonably able to provide.
Notwithstanding the Limitation of Liabilities section of this Booklet, we will not be liable
for damages arising under any Disbursement Image Service in excess of the amount of
the check, draft or miscellaneous debit giving rise to your damage claim. Any such claim
must include the account number, the check serial number, the exact amount (dollars
and cents) of the payment, the date the payment was made, the name of the payee, a'
detailed explanation of how the claimed loss occurred and the name, address and
phone number of the payee to whom you cannot prove payment was made.
Notwithstanding the Termination section of this Booklet, in the case of a Disbursement
Image Service using CD-ROMs, termination of such Service upon 30 days notice may not
be effective earlier than the first day of the statement period immediately following the
statement period during which such notice is given.
ELECTRONIC BILL PAYMENT CONSOLIDATION
Our Electronic Bill Payment Consolidation Service consolidates, reformats and delivers
remittance information and other data related to payments received from Bill Payment
• Service Providers for credit to your account. Detailed information regarding the Service is
available in the applicable User pocumentation.
z8
You agree that you will authorize Bill Payment Service Providers to deliver payments, `
remittance information and other related data to us for us to provide this Seroice to you.
You may also elect to have information of another company/organization reported
through this Service. Ifyou do so, you agree thatyou and the othercompany/
organization will authorize the Bill Payment Service Providers to deliver payments,
remittance information and other related data to us for us to provide this Service to you.
Remittance information and other data related to payments will be delivered to you in a
mutually acceptable form and manner.
If you are unable to post any payments to your customers' accounts, you must promptly
return such payments to us. You shall pay us immediately for the amount of any returned
payments which we previously credited to your account.
ELECTRONIC DATA INTERCHANGE (EDI)
Our EDI Services allow you to disburse funds and/or deliver payment-related
information to your receivers, electronically or by paper, by sending payment requests or
payment-related information to us as described in the applicable User pocumentation.
These Services also allow you to access payments-related and remittance-related
information in mutually acceptable formats received from your receivers or customers
and, where available, to match specified receivables and payables against payments.
For the web-based remittance advice delivery service, you are responsible for enrollment �
of your receivers on the service. During enrollment you will review and verify the accuracy
of all enrollment information provided by your receivers on the specified website. Upon
completion of enrollment, you authorize us to deliver the confidential passwords and
identifiers to your enrolled receiver to access the specified website. Your receiver must
keep such passwords and identifiers confidential. We will be fully protected in relying on
the correct user identification codes and passwords.
SENDING PAYMENTS AND RELATED INFORMATION
When you wish to pay your receivers, you transmit a data file to us, containing
instructions for your payments, in the format and by the cutoff times specified in the
applicable User pocumentation. When we receive a file from you under an EDI Service,
we perform certain edits on the data, translate it into the appropriate format and/or
medium and send the data to the payment system specified by you, except that we may
use any means oftransmission, funds transfer system, clearing house or intermediary
bank we reasonably select. On the specified dates, we issue your payments in the
required formats.
You control the content of any payment-related information you send to us and are solely
responsible for the accuracy of such information. You are solely responsible for storage
of all data relating to such information so that it can be made available to individual
receivers upon request.
�
29
• For the web-based remittance advice delivery service, we act as an intermediary to make
data and information available to or from you or your enrolled trading partners
reasonably promptly after receipt of such information. We make the information available
to your enrolled receivers on the specified website within one Business Day of receipt.
The information will be available on the specified website for the time periods specified
in the applicable User pocumentation. We will not alter the content of any information
that we receive from you or the trading partner. We are not responsible for the accuracy
of any of the information that we receive.
Payment requests originated via the EDI Services will be subject to the terms and
conditions for the underlying payment Services (Check Issuance, ACH and/or Wire
Transfer and International Electronic Funds Transfer) as described in their respective
sections of this Booklet.
RECEIVING REMITTANCE INFORMATION
Remittance information can be delivered to you in a mutually acceptable form and
manner and will be covered under the Information Reporting section of this Booklet.
ELECTRONIC FOREIGN EXCHANGE
Our Electronic Foreign Exchange Service allows you to initiate FX Requests over the
internet or by telephone. By accessing our website, you can request that we provide an
FX Transaction quotation, and by accepting our quotation you can electronically enter
� into FX Transactions, all in accordance with the instructions provided in the applicable
User pocumentation.
AUTHORIZED PERSONS
Before using an Electronic Foreign Exchange Service, you give us, by completing the
applicable Application, a written list of the persons authorized by you, including the
Security Administrators, to perform certain duties in connection with the Electronic
Foreign Exchange Service.
SECURITY PROCEDURE
You agree to use the Security Procedure, if any, when you send us FX Requests. The
purpose of the Security Procedure is to verify the authenticity of FX Requests delivered to
us in your name and not to detect errors in the transmission or content of the FX
Requests. Each time you use an Electronic Foreign Exchange Service, you represent and
warrant that, in view ofyour requirements, the Security Procedure is a satisfactory
method of verifying the authenticity of FX Requests.
You agree that we may act on FX Requests, even if they are unauthorized, if we act in
good faith and comply with the applicable Security Procedure and any written agreement
with you restricting our action on FX Requests. In such cases, we may enforce or retain
your payment to us for such FX Requests; provided, however, we may not enforce or
retain payment ifyou prove that the unauthorized FX Requests were not caused by a
person (i) entrusted at any time to act for you with respect to FX Requests or the
. applicable Security Procedure, (ii) who obtained access to your premises, computer
30
equipment or transmitting facilities or (iii) who obtained, from a source controlled by
you, information (such as keys and passwords) which facilitated breach ofthe applicable
Security Procedure.
EFFECTIVENESS OF FX TRANSACTIONS
You deliver FX Requests to us through the Service and we send you a quotation that you
can accept electronically. You must follow all system instructions, procedures and
warnings delivered to you on the website provided for the Service. Once we receive your
acceptance of our quote, we send you our deal acknowledgment in accordance with the
applicable User pocumentation, and the FX Transaction will be binding and effective.
The FX Transaction is not completed until we send this acknowledgment. You are
responsible for contacting us outside the Service if you have not received our electronic
acknowledgment within the time specified in the applicable User pocumentation (or in
the absence of such specification within a reasonable time). We will book FX
Transactions at our New York o�ce. Notwithstanding anything to the contrary in this
Booklet, we reserve the right to withdraw the Service or terminate your access to the
Service at any time without notice.
ACCOUNT DEBITS
You must have Collected and Available Funds in your account which, when added to
funds which may be made available under a line of credit, are sufficient to cover your FX
Requests. You may initiate an FX Request only if the offsetting debit to your account,
including the available line of credit, will not cause you to exceed the account balance
according to your records. If your records and ours disagree regarding the account �
balance, our records will control for purposes of our processing the FX Request.
Unless you have available funds under a line of credit with us, you are obligated to pay
us the amount of any FX Request once we receive your FX Request. We will debit the
account you specify for the amount of your payment before we process your FX Request.
If, for any Business Day, we receive more than one FX Request and/or other items
payable from your account, we may debit your account for such FX Requests and items in
any sequence we determine in our sole discretion.
If you have available funds under a line of credit with us, we will debit your specified
account for the amount of your payment on the settlement date of the FX Transaction.
Prior to the settlement date, you can request a change to the specified settlement
account for the FX Transaction by using the website for the Service. We will not be
obligated to implement such a change, and the change will not be effective until we have
had a reasonable opportunity to review and act upon your request.
REJECTION OF FX REQUESTS
We may reject any FX Request which does not comply with the requirements of this
Booklet or the applicable User pocumentation, including any processing limits described
in such User pocumentation, or which we have been unable to verify through use of the
Security Procedure. We also may reject any FX Request which exceeds the Collected and
Available Funds (including funds made available under a line of credit) on deposit with
us in the applicable account. Notice of rejection is given to you by telephone, by •
31 �
• electronic means, by facsimile or, in event such notice cannot be given by any of those
means, by mail. Notices of rejection will be effective when given.
CONFIRMATIONS AND SETTLEMENTS
You agree that FX Transactions effected through the Service are automatically confirmed
and do not require any further confirmation. Foreign exchange transactions effected by a
method other than the Service may also be confirmed on the website for the Service in
accordance with the User pocumentation. Your electronic confirmation of each such
foreign exchange transaction shall have the same effect as if you had received a written
confirmation from us and had reviewed, manually signed and returned the signed
confirmation to us.
INTERRUPTION OF COMMUNICATIONS
In the event of a service interruption involving the Service, you may effect FX
Transactions, confirm FX Transactions, and specify settlement instructions by contacting
one of our trading rooms or operations centers by telephone as designated in the
applicable User pocumentation.
INFORMATION REPORTING
Our Information Reporting Services make certain account, transaction and related
information available to help you control and manage your accounts and in connection
with any questions raised by you via such Services. This may include information
� generated from other Services you use. You may have information reported directly to
you or, with certain of our Information Reporting Services, reported at your direction to
another financial institution or other entity. Detailed information regarding an
Information Reporting Service is available in the applicable User pocumentation.
ACCOUNTS OF OTHER COMPANIES/ORGANIZATIONS
You may elect to have accounts of another company/organization reported to you with
any of our Information Reporting Services. You agree that, for each such account, the
company/organization will provide us with its written authorization, in a form acceptable
to us, for us to make that company's account information available to you. However, you
do not need to provide us such written authorization if the other company is a U.S.
Subsidiary and its accounts are domiciled in the United States of America. In that case,
you represent and warrant that such other company is a U.S. Subsidiary and that it has
authorized us to make its account information available to you.
ACCOUNTS AT OTHER BANKS
You may also elect to have your accounts, or accounts of another company/organization,
maintained at another financial institution reported through certain of our Information
Reporting Services. If you do so, you agree that you and the other company/organization
will authorize the other financial institution to make the reporting information available
to us and to take all other actions necessary for us to provide Information Reporting
Services to you.
•
32
LOCKBOX
THIRD-PARTY INFORMATION •
Ifyou gain, through your use of one or more Services, access to any information relating
to any person other than us, you or any of your Subsidiaries which have authorized your
receipt of such information, you agree that you will treat such third-party information as
strictly confidential and you shall not disclose it to any person outside your company or
to any persons within your company except those who have a need to know. Further, you
shall ensure that adequate measures have been taken to prevent the unauthorized use
of any such third-party information. You agree that you will not use any such third-party
information for your own purposes other than in a communication to us relating to the
Service.
Our Lockbox Services involve the processing of checks and other payment instruments,
such as drafts, that are received at a Lockbox Address or by special arrangement with us,
excluding without limitation the processing of cash, stock certificates and tangible
valuables. With a Lockbox Service, you instruct your customers to mail checks and other
payment instruments you want to have processed under a Service to the Lockbox
Address. We are not liable to you for losses you suffer if anything other than checks or
other payment instruments are sent to the Lockbox Address. We and/or our agents will
have unrestricted and exclusive access to the mail sent to the Lockbox Address.
If we receive any mail containing your lockbox number at our lockbox operations location �
(instead of the Lockbox Address), we may handle the mail as if it had been received at
the Lockbox Address.
PROCESSING
We will handle checks received at the Lockbox Address according to the applicable
Account Agreement, applicable User pocumentation and our availability schedule, as if
the checks were delivered by you to us for deposit to your designated account, except as
modified by this Booklet.
We will open the envelopes picked up from the Lockbox Address and remove the
contents. Checks and other documents contained in the envetopes will be inspected and
handled in the manner specified in the set-up documents for the applicable Lockbox
Address. We capture and report information related to the lockbox processing, where
available, if you have specified this option in the set-up documents. As appropriate, we
will endorse all checks we process on your behalf and deposit them in the account you
designate for the applicable Service.
If we process an unsigned check as instructed in the set-up documents, and the check is
paid, but the account owner does not authorize payment, you agree to indemnify us, the
drawee bank (which may include us) and any intervening collecting bank for any liability
or expense incurred by us or such other bank due to the payment and collection of the
check.
I 33
•
• If this option is available and if you instruct us not to process a check bearing a
handwritten or typed notation "Payment in Full" or words of similar import on the face of
the check, you understand that we have adopted procedures designed to detect checks
bearing such notations; however, we will not be liable to you for losses you suffer if we
fail to detect checks bearing such notations.
Unless we agree otherwise, each Business Day we will prepare and send remittance
materials (images via internet, electronic file and/or paper packages) relating to the
Lockbox Address to you at the address you specify for that Lockbox Address. The material
will include, but is not limited to, any checks not processed in accordance with the
set-up documents plus information regarding the deposit for the day. For the wholesale
Lockbox Service, the package will also indude invoices and other materials received at
the Lockbox Address.
ACCEPTABLE PAYEES
For the Lockbox Address, you will provide to us the names of Acceptable Payees. We will
process a check only if it is made payable to an Acceptable Payee and if the check is
otherwise processable. In some jurisdictions outside the United States, an Acceptable
Payee is limited to you and limited variations of your name. In all other jurisdictions,
including the United States, you warrant that each Acceptable Payee is either you or your
a�liate. If an Acceptable Payee is your affiliate, then you also warrant that such
Acceptable Payee has authorized checks payable to it to be credited to the account you
designate for a Lockbox Service. We may require written authorization from any such
� Acceptable Payee. We may treat as an Acceptable Payee any variation of any Acceptable
Payee's name that we deem to be reasonable.
ONLINE STOP PAYMENT
Our Online Stop Payment Services allow you to electronically place or cancel a Stop
Payment Request. This is in addition to your ability to make stop payment requests in
person, by telephone or in writing as described in your Account Agreement.
A Stop Payment Request will not be effective until we review our records for the time
period specified in the applicable User pocumentation, determine that the check has not
been paid during that period and respond to you with an online status of your request of
"accepted" (rather than "rejected" or "pending").
A Stop Payment Request terminates at the end of the period designated in the applicable
User pocumentation, unless the Stop Payment Request is renewed or canceled earlier. A
Stop Payment Request is canceled automatically when the account on which the check is
drawn is closed or transferred.
REQUESTING STOP PAYMENTS
You will include in each Stop Payment Request the Magnetic Ink Character Recognition
(MICR) serial number and exact amount (dollars and cents) of the check for which
payment is being stopped and the account number on which the check is drawn. You
• understand and agree that we can only stop a check that shows exactly the same MICR
34
POSITIVE PAY
serial number and amount as that included in the related Stop Payment Request since •
our computer system identifies a check on the basis of the MICR serial number and the
exact amount of the check.
You will review your account statements prior to transmitting any Stop Payment Request.
You will not transmit any Stop Payment Request relating to a check that has been shown
to be paid on such statements.
In some cases, we may pay a check even if a Stop Payment Request is in effect. For
example, if one of our branches (or banking centers) or affiliates becomes a"holder in
due course" of the check that you asked us to stop, we may still pay the check.
The procedures for placing and acknowledging Stop Payment Requests are described in
the applicable User pocumentation.
If you use any Online Stop Payment Services with respect to an account connected to a
Controlled Disbursement Service, you must follow the procedures in this section rather
than the Stop Payment procedures in the Controlled Disbursement Services section.
Our Positive Pay Services allow you to identify exception items, to request photocopies
and/or electronic images of exception items and to instruct us whether to pay or return
those items. In many locations, if you send us an issue file, your information may be
made available at the teller line. This is called "Teller Positive Pay", which helps identify �
fraudulent checks that are presented for payment at many of our banking centers. With
Teller Positive Pay, the decision whether to pay such an item may be made by us at the
teller line.
On each Business Day, we provide you a report of checks presented to us for payment on
the prior Business Day and which we have identified as exceptions based on information
you have provided to us and as more fully described in the applicable User
Documentation. F�cceptions are determined by comparing checks presented to us (either
by other depository institutions or, where applicable, for cashing at one of our banking
centers) with lists of checks issued or canceled by you which you transmit electronically
to us each Business Day by the time specified in the applicable User pocumentation.
Alternatively, where available, you may choose an option under which we report all
checks presented for payment, in which case we will treat all such checks as exception
items.
On the same day we report exception items to you, you must notify us, by the deadline
specified in the applicable User pocumentation, which checks you want us to pay or
which to dishonor and return. If you fail to notify us by the deadline, we will handle the
exception items in accordance with the prescribed default procedure (which you may
choose where the choice is available). Where required, you will indicate which checks
you want us to return, having been deemed by you to be fraudulent. Our deadlines,
default procedures and procedures for acknowledging pay and return requests are
described in the applicable User pocumentation. In order to assist you in making your •
35
• decision whether we should pay or return exception items, you may request a copy of
any exception item.
AUTHORIZED PERSONS
Before using a Positive Pay Service, you give us a written list, in a form acceptable to us,
of the persons authorized by you to perform certain duties in connection with such
Service.
ONLINE OPTION
You may access the daily reports of exception items via one of our online systems. Using
that system, you must then notify us which exception items to pay or which to return.
You may request photocopies of exception items, which we will fax to you, as more fully
described in the applicable User pocumentation. Where available, you may arrange to
receive and display electronic images of exception items.
MANUAL OPTION
We provide you a report of exception items. You must then notify us which items to pay
or which to return.
ACKNOWLEDGMENTS
You authorize us to return checks or to pay checks in accordance with your instructions
and the default procedure in the applicable User pocumentation. We will have no liability
for payment of a check which is unauthorized or fraudulent if (i) the check is included in
� a report of exception items, (ii) you have not selected a return default for exception items
and (iii) you do not give us timely instructions to return the check.
You acknowledge that our Positive Pay Services do not preclude our standard check
processing procedures, which may cause a checkto be dishonored even if your
instructions or the default procedure do not otherwise require us to return such check.
You acknowledge that, if you have our Teller Positive Pay Service, the decision whether to
pay or not pay an item may be made by us at a banking center.
If you dedine to use a Teller Positive Pay Service offered by us or fail to meet your
applicable issue �le deadlines in the User pocumentation, you also acknowledge that,
as between you and us, you will bear the full loss on checks which are drawn on your
accounts with us and paid by us in good faith if the checks are counterfeits or bear
unauthorized alterations to the amounts or unauthorized maker signatures, even if such
checks would otherwise be exception items.
You acknowledge that our Positive Pay Services are intended to be used to identify and
return checks which you suspect in good faith are fraudulent. They are not intended to be
used as a substitute for stop payment orders on checks which are not suspected in good
faith to be fraudulent. If we suspect or deem, in our sole discretion, that you are using
these Services contrary to those intentions, we may require you to provide evidence that
checks we return pursuant to your instructions or the return default, if applicable, were in
• fact fraudulent. In addition, we may hold you liable for losses we sustain on checks
36
RECLEAR
which we are requested to return under these Services and which you do not reasonably •
establish as fraudulent checks.
We will use reasonable efforts under the circumstances to respond promptly to proper
requests for copies of exception items if image items are unavai(able, but you
acknowledge that our failure to provide copies does not extend the deadlines by which
you must notify us of your pay/no-pay decisions.
Our Reclear Service resubmits a check or other payment instrument to the financial
institution on which it was drawn if the check or payment instrument has been returned
to us unpaid with the notation "refer to maker", "nonsufficient funds" or "uncollected
funds". Generally, we will not notify you that such an item has been returned to us
unpaid before we reclear it. If a recleared item is returned to us a second time, we will
charge your account for the total amount of the check or payment instrument. We
generally total your returned items each day, debit your account for the total amount and
then send the returned checks and payment instructions to you. The items we send to
you serve as your notice of the nonpayments.
RE-PRESENTMENT CHECK (RCIQ
Our RCK Services allow you to collect eligible RCK checks that have been returned for �
insufficient or uncollected funds, using the ACH Services within the United States of
Amenca, as descnbed in the applicable User pocumentation. The creation of the RCK
Entries on your behalf by us using the ACH Services will be subject to the terms and
conditions of the ACH Service section of this Booklet, including but not limited to the
Security Procedures requirements described in that section. The capitalized ACH terms
appearing in italics below are defined in the NACHA Rules.
YOUR RESPONSIBILITIES
You authorize us to create RCK Entries on your behalf as provided in the User
Documentation and the NACHA Rules. You are deemed to be the Originator under the
NACHA Rules, and on each day you use a Service, you represent and warrant that (i) you
have obtained all necessary authorizations from the Receiver prior to the initiation of
any corresponding ACH Entry for a RCK and (ii) you accept as Originator all liability
corresponding to the representations and warranties we as ODFI make under the NACHA
Rules regarding RCK.
You shall pay us for the amount of any returned debit Entries (including rejected debit
Entries) or any adjustment Entries accepted by us and which we have previously credited
to your account. Such amounts shall be immediately due and payable by you to us.
Returned debit Entries appear on your reports to the extent agreed by you and us, and
you agree that we do not need to send a separate notice of debit Entries which are
returned unpaid.
•
37
• COMPLIANCE WITH NACHA RCK RULES AND LAWS
You agree to comply with the NACHA Rules for all Entries whether or not an Entry is sent
through the ACH network. You act as an Originator and we act as an ODFI with respect to
Entries. The NACHA Rules govern if they conflict with this Booklet, except that the file
specification requirements in the User pocumentation govern if they conflict with the
NACHA Rules.
Each time you use an RCK Service (i) you warrant that you have obtained the appropriate
authorization from each Receiver and the Entries conform to the authorization and
comply with the NACHA Rules and (ii) you make the same warranties to us as we make
under Section 2.2 or any successor section of the NACHA Rules.
TAX PAYMENTS
Our Tax Payment Services allow you to instruct us, using a touchtone telephone or our
Software on your computer, to pay any of your taxes which are reported or filed using the
tax forms as more fully described and specified in the applicable User pocumentation.
Based on your Tax Payment Instructions, we prepare and remit your tax deposits. Each of
these Services is described in the applicable User pocumentation.
SECURITY PROCEDURE
You agree to use the Security Procedure, if any, when you deliver Tax Payment
Instructions and, as provided in the applicable User pocumentation, cancellation
� requests to us. The purpose of the Security Procedure is to verify the authenticity of
Tax Payment Instructions or cancellation requests and not to detect errors in the
transmission or content of these messages. You represent and warrant each time you
use a Tax Payment Service that, in view ofyour requirements, the Security Procedure is a
satisfactory method of verifying the authenticity of these messages. You agree we may
act on any Tax Payment Instructions or, as provided in the applicable User
Documentation, cancellation requests, the authenticity of which we have verified
through the use of the Security Procedure.
CUTOFF TIMES
You must comply with the deadlines specified in the applicable User pocumentation for
initiation of Tax Payment Instructions. If a Service allows you to send instructions to us
after the cutoff time, or on a non-Business Day, we may treat these instructions as if we
received them on the next Business Day.
COMMUNICATION EXPENSE AND RISK
Transmission of Tax Payment Instructions to us will be at your expense, except that we
may provide a toll-free number telephone service. If that service is disrupted for any
reason, you have the responsibility and risk of using alternative means of communicating
Tax Payment Instructions to us accurately and in time for us to perform any Tax Payment
Service.
�
38,
REQUIRED INFORMATION •
You will furnish us with all required information and authorizations at the times, in the
manner and with the content specified in the applicable User pocumentation.
TAX FORMS AND REMITTANCES
After we have received complete Tax Payment Instructions from you, we prepare the
related tax forms (which may be on a magnetic tape or by electronic transmission as
authorized by the Internal Revenue Service or other tax authority, as applicable) for
submission to the appropriate tax authority.
If permitted by the input method, you may specify a settlement date in accordance with
the User pocumentation. If you use a touchtone phone as your input method, you may
request a specified settlement date by calling the designated customer representative
for the applicable Tax Payment Service.
For purposes of these Services, settlement date means the date you specify that the
taxing authoriry's account is to be credited. If you do not specify a settlement date, we
will pay the amount you specify on or before the tax due date. If you specify the
settlement date, payment will be made on the settlement date.
ACCOUNT DEBITS
If you do not specify a settlement date, we debit your account for any tax payment on the
Business Day of transmission. If you specify a settlement date, we generally debit your
account on the settlement date unless you are prefunding your tax payments. Prefunding �
means that you pay for all tax payments by such time before the settlement date as we
may specify. At our discretion, we may at any time without notice debit your account on
the Business Day that Tax Payment Instructions are transmitted to us (or on any other
later date). If we debit the funds on the transmission date (or any other date before the
payment date), we hold the funds as a deposit liability to you, and not as trust funds,
until the date when we remit the funds to the appropriate tax authority. We will not pay
you interest on the funds.
We reserve the right to debit your account and to make a tax payment on your behalf
earlier than the tax due date if the information in yourTax Payment Instruction is unclear
or inadequate to permit us to determine the later due date under the applicable Tax
Payment Service or if we otherwise reasonably decide that any delay in the payment of
the tax may expose you to liability for a tax penalty. In such case we will not be liable to
you for any lost use of funds.
REJECTION OF INSTRUCTIONS
We may reject your instructions during or immediately after transmission to us if they do
not comply with the requirements of this Booklet or the applicable User pocumentation
or which we have been unable to verify through use of the Security Procedure. You will be
informed of any such rejection only as specified in the applicable User pocumentation,
and no other notice of rejection will be provided.
In addition, we may decline to perform any Tax Payment Service or to report any tax, file •
any tax form, or pay any related tax for you, even if we have received instructions to do
39
• so, if the tax payment and our related service fees and charges exceed the Collected and
Available Funds on deposit in your account or your ACH processing limit. If we reject a
Tax Payment Instruction for that reason, we will promptly notify you by telephone or
facsimile transmission in which case we will not be liable to you for the tax payment, any
interest on the amount of your tax liability, or for any tax penalty imposed on you in
connection with the tax liability. You agree these means of communication are a
�
reasonable means of notifying you.
CANCELLATION
Subject to the provisions in the User pocumentation, you may cancel a Tax Payment
Instruction prior to disconnection of the telephone call in the case of an instruction
initiated by touchtone telephone or prior to transmission to us of an instruction initiated
through your computer.
Thereafter, a Tax Payment Instruction may be canceled only if:
• The tax payment has not been remitted, credited or otherwise made available to a tax
authority;
• A request to cancel provides sufficient information for us to effect the request; and
The request is received by us by telephone or, at the option of either you or us, in
writing (including facsimile transmissions) in time (but in no event later than the
deadline specified in the applicable User pocumentation) to afford us a reasonable
opportunity to effect the request.
OVERPAYMENTS
If we make an overpayment of your tax liability due to our error, we will recredit your
account for the amount of the overpayment, and you agree to take such actions as we
reasonably request to obtain a refund of the overpayment and to arrange for payment of
such refund to us. In any event, you agree to repay us for any overpayment upon the
earlier of (i) your recovery of such overpayment or (ii) the application of the related tax
credit to another of your tax payment obligations.
RECORDS AND NOTICE OF ERRORS
We will provide you with statements and confirmations containing information about
your tax payments in accordance with and subject to the applicable User pocumentation.
Nothing in this Booklet relieves you of any duty imposed by law or contract regarding the
maintaining of records or from employing adequate audit, account and review practices
customarily followed by similar businesses. You will promptly review for accuracy alt
records, information and statements delivered from time to time to you by us.
You must send us written notice, with a statement of relevant facts, within 14 days after
you receive the first notice or statement indicating a discrepancy between our records
and yours. If you fail to give the required notice, we will not be liable for any loss of
interest or for any compensation for any other loss or cost relating to an unauthorized or
erroneous debit to your account or because of any other discrepancy in the notice or
• account statement. You must notify us promptly by telephone, confirmed in writing, if
40
you learn or discover from any source other than a notice or statement from us of •
information concerning an unauthorized or erroneous debit to your account.
SUPPLEMENTAL LIMITATION OF LIABILITIES
For each Tax Payment Service, this section supplements the Limitation of Liabilities
section of this Booklet.
If any Tax Payment Service is interrupted for any reason and you are unable to complete
transmission ofyourTax Payment Instruction to us, you will not be relieved ofyour
obligation to make any tax payment otherwise contemplated to be made by such Service.
We will not incur any liability if you fail to make any required tax payment by other means
in the event of such interruption.
WIRE TRANSFER AND INTERNATIONAL ELECTRONIC FUNDS TRANSFERS
This section applies to our U.S. domestic and worldwide wire and internal funds transfer
services and to our International Electronic Funds Transfer Services outside the United
States ofAmerica. It does not apply to ACH Services within the United States of America,
which are covered in the "Automated Clearing House (ACH)" section of this Booklet.
Wire Transfer and International Electronic Funds Transfer Services permit you to transfer
funds electronically and, as appropriate, to transmit related messages as more fully
described in the applicable User pocumentation. These transfers are typically from your
accounts with us to other accounts at our bank, at our affiliated banks or at other eligible �
banks. These transfers may also include transfers to your accounts with us from your
accounts at other banks. These transfers may be made according to a specific request
from you or according to your standing instructions (which may include daily sweeps
from your accounts at our affiliated banks to your account with us). They also may be
low-value batch payments made according to multiple requests within a single electronic
data file for transfers to or from your accounts.
MULTIBANK
The Multibank Service permits you to relay through us your instructions to another bank
to wire transfer funds from one of your accounts held at that other bank. Where feasible,
we will reformat your instructions for SWIFf and relay it by SWIFf to the appropriate bank,
subject to the Business Day schedules for us, SWIFf and the paying bank. Otherwise, we
will use whatever means or medium we deem appropriate, including use of third-party
facilities, to relay your instructions to another bank.
Before using the Multibank Service, you must provide us with the account number and
bank name for each account to be debited using this Service. You also must provide the
bank holding the debit account with express, written authorization (with a copy to us
where requested) to act on instructions we send to it under this Service. You agree that
we may rely on that authorization until we have had a reasonable opportunity to act on
notice that it has been revoked.
Multibank instructions are not payment orders to us, and we have no obligation to
execute, transmit or accept any payment orders made to us under the Multibank Service. �
41
• We reformat and transmit your payment order to another bank, and we have no duty to
do so if your request is defective, incomplete, erroneous or inconsistent with the terms of
this Booklet. We may act on your Multibank instructions as we reasonably consider
appropriate notwithstanding any error, omission, defect or lack of clarity in its terms and
even if the instructions appear to duplicate other Multibank requests. You agree that
your indemniry of us, as set forth in the "Protection From Third Parties" section of this
Booklet, applies to any claims by another bank based on our sending a Multibank
instruction containing any error, omission, defect or lack of clarity.
If you wish to cancel or amend a payment order set forth in a Multibank instruction, you
must contact the bank to which the payment order is directed and act in accordance with
its procedures.
Reports on Multibank instructions which we have processed will be included in an
Information Reporting Senrice which you have arranged to use.
COMPLIANCE WITH RULES AND LAWS
You agree to comply with all applicable payment system rules, including the national
payment system rules and any other applicable laws and regulations of the receiving
country of your transaction. You also agree to comply with the authorization and notice
requirements applicable to any Request to debit another person's account.
AUTHORIZED PERSONS
� Before using a Wire Transfer or International Electronic Funds Transfer Service, you give
us a written list, in a form acceptable to us, of the persons authorized by you to perform
certain duties in connection with such Service.
SECURITY PROCEDURE
You agree to use a Service in accordance with the relevant Security Procedure, if any. The
purpose of the Security Procedure is to verify the authenticity of Requests delivered to us
in your name and not to detect errors in the transmission or content of Requests. You
represent and warrant each time you use a Wire Transfer or International Electronic
Funds Transfer Service that, in view of your requirements, the Security Procedure is a
satisfactory method of verifying the authenticity of Requests.
You agree that we may act on Requests, even if they are unauthorized, if we act in good
faith and comply with the applicable Security Procedure and any written agreement with
you restricting our action on Requests. In such cases, we may enforce or retain your
payment to us for such Requests; provided, however, we may not enforce or retain
payment if you prove that the unauthorized Requests were not caused by a person (i)
entrusted at any time to act for you with respect to Requests or the applicable Security
Procedure, (ii) who obtained access to your premises, computer equipment or transmitting
facilities or (iii) who obtained, from a source controlled by you, information (such as keys
and passwords) which facilitated breach of the applicable Security Procedure.
ACCOUNT DEBITS
You must have Collected and Available Funds in your account which, when added to
, funds which may be made available under a line of credit, are sufficient to cover your
42
Requests. You may initiate a Request only if the offsetting debit to your account, •
induding the available line of credit, will not cause you to exceed the account balance
according to your records. If your records and ours disagree regarding the account
balance, our records will control for purposes of our processing the Request.
You are obligated to pay us the amount of any Request once we act on, other than to
reject, your Request. At our discretion, we may at any time without notice require
payment before we process your Request. Even if we have done so in the past, we are
not obligated to process any Request without having first been paid by you, but, if we do,
the amount is immediately due and payable without notice or demand.
Prior to initiating any wire transfer Request to debit an account of a third party, you must
provide us with documents, in a form acceptable to us, evidencing the third party's
authorization.
You will pay us for the amount of any returned or rejected debit transactions, or any
adjustments, which we previously credited to your account.
If, for any Business Day, we receive more than one Request and/or other items payable
from your account, we may debit your account for such Requests and items in any
sequence we determine in our sole discretion.
ACTING ON REQUESTS
We will use any means of transmission, funds transfer system, clearing house or
intermediary bank we reasonably select to transfer funds. �
After we receive a Request by the applicable processing deadline (as specified in the
applicable User pocumentation), but no later than the value date stated in your Request
(if such date is not earlier than the day such Request is received), we will act upon such
Request by making applicable accounting entries or by transmitting payment instructions
to the applicable bank or other party. If applicable, our acting on your Request will also
be subject to the business day schedule of any of our banking centers or afFiliates
holdin� an account to be debited or credited under a Service. We may treat Requests we
receive aftera deadline as ifwe received them on the next Business Day. International
Electronic Funds Transfers will be deemed received by us when we receive the complete
electronic data file at the location specified in the applicable User pocumentation.
REJECTION OF REQUESTS
We may reject any Request which does not comply with the requirements of this Booklet
or the applicable User pocumentation, including any processing limits described in such
User pocumentation, or which we have been unable to verify through use of the Securiry
Procedure. We also may reject any Request which exceeds the Collected and Available
Funds (including funds made available under a line of credit) on deposit with us in the
applicable account. We may also reject any Request if it may be returned for any reason
under the applicable national payment system rules of the receiving country of your
transaction. Notice of rejection is given to you by telephone, by electronic means, by
facsimile or by mail. Notices of rejection will be efFective when given.
i
43
• CANCELLATION OR AMENDMENT
We have no obligation to cancel or amend Requests after we receive them or to cancel or
amend any particular funds transfer requested by a standing instruction which is in
effect. If you send us a Request instructing us to cancel or amend a prior Request and we
are able to verify the authenticiry of the cancellation or amendment Request using the
Securiry Procedure, we will make a reasonable effort to act on that Request, but we will
not be liable if it is not effected. You agree to indemnify us against and hold us harmless
from any and all liabilities, claims, costs, expenses and damages of any nature,
including Legal Expenses, we incur in connection with your Request to amend or cancel.
Your obligations under this provision will survive termination of these Wire Transfer and
International Electronic Funds Transfer Services.
PROVISIONAL PAYMENTS
Payment by us for any transaction we credit to your account is provisional until we
receive final settlement for the transaction. If final settlement is not received, we are
entitled to a refund and we may charge your account for the amount credited. We may
delay the availability of any amount credited for a transaction if we believe that there
may not be sufficient funds in your account to cover chargeback or return of the
transaction.
INCONSISTENCY OF NAME AND NUMBER
A beneficiary's bank (including us when we are the beneficiary's bank) may make
� payment to a beneficiary based solely on the account or other identifying number. We or
an intermediary bank may send a Request to an intermediary bank or beneficiary's bank
based solely on the bank identifying number. We, any intermediary bank and any
beneficiary's banks may do so even if the Requests include names inconsistent with the
account or other identifying number as long as the inconsistency is not known by us or
such other bank. Neither we nor any other bank has a duty to determine whether a
Request contains an inconsistent name and number.
NOTICE OF ACCOUNT STATEMENT DISCREPANCIES
Information concerning payments made pursuant to your Requests wilt be reflected in
your account statements and, in some cases, in written or electronic advices and reports
produced through one of our Information Reporting Services. You must send us notice, in
writing or by electronic means approved by us for such purpose, with a statement of
relevant facts, promptly after you receive the first notice or statement indicating a
discrepancy between our records and yours. Ifyou fail to give the required notice within
14 days, we will not be liable for any loss of interest or for any compensation for any
other loss or cost relating to an unauthorized or erroneous debit to your account or
because of any other discrepancy in the notice or account statement. You must notify us
promptly by telephone, confirmed in writing, if you learn or discover from any source
other than a statement, advice or report from us of information concerning an
unauthorized or erroneous debit to your account.
•
44
ELECTRONIC TRADE SERVICES
Our Electronic Trade Services allow you to (i) initiate collections; (ii) instruct us to advise •
you of our receipt or confirmation, or the payment, of Export Letters of Credit and
Advised Standby Letters of Credit received by us and naming you as beneficiary; (iii)
request full or partial transfers of your Export Letters of Credit or full transfers of your
Advised Standby Letters of Credit; (iv) prepare documents in connection with your Export
Letters of Credit; (v) access reports on letter of credit transactions, open account
transactions, collections and banker's acceptances; (vi) initiate open account
transactions; (vii) instruct us to advise you of our receipt of purchase orders received by
us and naming you as the supplier; and (viii) instruct us to issue standby and import
letters of credit and guarantees. Detailed information regarding each Service is found in
the applicable User pocumentation.
ADVISED STANDBY LETTERS OF CREDIT
OurAdvised Standby Letters of Credit Service allows us to advise you by electronic
transmission of (i) our receipt of any standby letter of credit naming you as beneficiary;
(ii) the status of any documents or payments with regard to any Standby Advised Letter
of Credit; (iii) our confirmation of any such letter of credit; and (iv) any payment made
pursuant to a drawing under any such letter of credit.
You may elect to have standby advised letters of credit of a Subsidiary or other entity
reported to you with our Electronic Trade Letters of Credit Service. You agree that the
Subsidiary or other entiry will provide us with a written authorization, in a form accept- �
able to us, for us to make that Subsidiary or other entity's information available to you.
Full Transfers. You may request the transfer, without substitution of invoices, of all of
your rights as beneficiary of Advised Standby Letters of Credit by submitting to us, for
each transfer, a request providing the following information:
• Standby Letter of Credit number
• name of issuing bank
• our advice number
• name and address of second beneficiary's advising bank
• name and address of second beneficiary
• date of application
If we approve the transfer, we will place the appropriate endorsement on the Advised
Standby Letter of Credit and send it to the second beneficiary or send the second
beneficiary a transferred letter of credit document prepared by us. The second beneficiary
will have sole rights as beneficiary, whether existing now or in the future, including sole
rights to agree to any amendments, including increases or extensions or other changes.
General. The Advised Standby Letter of Credit and the transfer must be subject to UCP or
ISP98, and our rights hereunder are in addition to rights we have under UCP or ISP98, as�
applicable.
45
• You must provide us the original advised Standby Letter of Credit and any existing
amendments. You understand that we may, at our sole discretion, refuse to approve any
full or partial transfer to a second beneficiary. You acknowledge that due to conditions of
the original Advised Standby Letter of Credit, certain proprietary information may be
disclosed to the second beneficiary and/or to the applicant under the original Advised
Standby Letter of Credit. We will have no liability to you in the event of such disclosure
and, in such event, you will indemnify and hold us harmless from all claims of third
parties. You acknowledge that your rights as beneficiary in the original Advised Standby
Letter of Credit are irrevocably transferred to the second beneficiary(ies) who shall have
sole rights. In that connection, your approval is not required for us to honor a discrepant
presentation made by the second beneficiary.
COLLECTIONS
For our transfer fee, we may debit your account(s) with us, which you may designate
subject to our reasonable approval. You also agree to pay us on demand any expenses
which may be incurred by us in connection with this transfer.
Our Electronic Trade Collections Service allows you to initiate a collection (as that term is
defined in the Uniform Rules for Collections) by delivering an instruction to a collecting
bank.
The instruction will be on a form prescribed by us, but we will not have any responsibility
� or liabiliry for the terms and conditions of any instruction; you accept all such
responsibility and liabiliry. Each collection will be governed by the Uniform Rules for
Collections. You will promptly transmit to us a copy of the completed collection form and,
upon our request, will provide to us copies of the underlying documentation.
You represent and warrant to us as of the date you transmit the instruction form to us
that the collection is not prohibited under the foreign asset control or other regulations
of the United States of America or the applicable laws of any other jurisdictions.
Upon our receipt of any payment of a collection, the amounts received (less related
charges, disbursements and/or expenses) will be paid to you, except that if we are
required to return any such payment received upon the insolvency, bankruptcy or
reorganization of the presenting bank or collecting bank or other third party or for any
other reason, you will repay to us the amount paid by you together with interest thereon
from the date we returned the payment and so notified you at the rate specified by us in
our schedule of charges. Unpaid items and related documents received by us may be
returned to you by regular mail at the address specified in the Authorization and
Agreement Certification form which accompanied this Booklet or such other address as
may be notified by you in writing.
EXPORT LETTERS OF CREDIT
Our Export Electronic Trade Letters of Credit Service allows you to prepare export
� documents using electronic data captured through our electronic advise process and
46
allows us to advise you by electronic transmission of (i) our receipt of any Export Letter •
of Credit naming you as beneficiary, including the wording of an Export Letter of Credit so
you can prepare export documents as per the Export Letter of Credit; (ii) the status of any
documents or payments with regard to any Export Letter of Credit; (iii) our confirmation
of any such letter of credit and (iv) any payment made pursuant to a drawing under any
such letter of credit.
You may elect to have export letters of credit of a Subsidiary or other entity reported
to you with our Export Electronic Trade Letters of Credit Service. You agree that the
Subsidiary or other entity will provide us with a written authorization, in a form
acceptable to us, for us to make that Subsidiary or other entity's information available
to you.
You may prepare shipping documents based on your Export Letter of Credit advised
details. You may then edit and locally print those documents and courier them to us for
presentation.
REQUESTS FOR TRANSFERS
Partial Transfers. You may request the partial transfer, with or without substitution of
invoices, of Export Letters of Credit by submitting to us, for each transfer, a request
providing the following information:
• whether the transfer is with or without substitution of invoices
• Export Letter of Credit number
• name of issuing bank
• our advice number
• name and address of second beneficiary's advising bank
• amount to be transferred
• description of inerchandise subject to the transfer
• name and address of second beneficiary
• unit price
• expiration date of transfer Export Letter of Credit
• latest shipment date
• number of days after shipment within which documents must be presented
• insurance percentage (if applicable)
• date of application
�
If we approve the transfer, we will advise the second beneficiary of the terms and
conditions of the transferred credit by full text teletransmission, mail/airmail or courier
(as we deem appropriate).
u
47
� With respect to all partial transfers, whether with or without substitution of invoices, you
may refuse to allow us to notify the second beneficiary(ies) of any future amendment(s)
received under the original Export Letter of Credit.
If you elect transfer with substitution of invoices, then, on our demand, you will deliver to
us within one (1) Business Day your draft, commercial invoice and any other required
documents in compliance with the terms of the original Export Letter of Credit. The draft
and documents are in substitution of those presented by the second beneficiary. When
(i) the documents of the second beneficiary and the substitution documents from the
first beneficiary are determined to comply with the terms of the Export Letter of Credit or,
if determined to be discrepant, are taken up by the issuing bank and (ii) we are in receipt
of funds, we will pay you in accordance with your instructions for the amount of the
difference between your draft and the draft of the second beneficiary, less any fees due
and payable to us in connection therewith. If you fail, at our demand, to deliver to us
your drafts, invoices and other required documents as stated above, you acknowledge
our right to present invoices and other documents received from the second beneficiary
in accordance with the instructions of the original Export Letter of Credit. You also
understand that we will not pay you the difference between the amount of the draft of
the second beneficiary and the amount authorized to be paid to you under the original
Export Letter of Credit.
Full Transfers. You may request the transfer, without substitution of invoices, of all of
your rights as beneficiary of Export Letters of Credit by submitting to us, for each transfer,
� a request providing the following information:
• Export Letter of Credit number
• name of issuing bank
• our advice number
• name and address of second beneficiary's advising bank
• name and address of second beneficiary
• date of application
If we approve the transfer, we will place the appropriate endorsement on the Export
Letter of Credit and send it to the second beneficiary or send the second beneficiary a
transferred letter of credit document prepared by us. The second beneficiary will have
sole rights as beneficiary, whether existing now or in the future, including sole rights to
agree to any amendments, including increases or extensions or other changes.
General. The Export Letter of Credit and the transfer must be subject to UCP and our
rights hereunder are in addition to rights we have under UCP.
You must provide us the original Export Letter of Credit and any existing amendments.
You understand that we may, at our sole discretion, refuse to approve any full or partial
transfer to a second beneficiary. You acknowledge that due to conditions of the original
SExport Letter of Credit, certain proprietary information may be disclosed to the second
m
beneficiary and/or to the buyer under the original Export Letter of Credit. We will have no•
liability to you in the event of such disclosure and, in such event, you will indemnify and
hold us harmless from all claims of third parties. You acknowledge that your rights as
beneficiary in the original Export Letter of Credit (up to the amount shown in your request
with respect to partial transfers) are irrevocably transferred to the second beneficiary(ies)
who shall have sole rights (but only up to the amount shown in your request in the case
of a partial transfer). In that connection, your approval is not required for us to honor a
discrepant presentation made by the second beneficiary.
For our transfer fee, we may debit your account(s) with us, which you may designate
subject to our reasonable approval. You also agree to pay us on demand any expenses
which may be incurred by us in connection with this transfer.
INFORMATION REPORTING
We will make available to you, subject to the terms of the Information Reporting section
of this Booklet, reports on import, export and standby letter of credit transactions,
banker's acceptances, collections and open account transactions, as more fully
described in the applicable User pocumentation.
OPEN ACCOUNT
Our Electronic Trade Open Account Service permits you electronically to (i) inform us of
your purchase order details, instruct us on examining import documents for compliance �
with your purchase orders and instruct us to pay the presenting party and (ii) receive
notification of open account transactions initiated through electronic means.
Purchase Orders. You will electronically transmit to us, in accordance with applicable
User pocumentation, files of purchase orders you have sent to your vendors with
instructions to present documents to us. The electronic files will be in such format(s) and
transmitted through such channel(s) as you have selected and we have approved. If you
are not requesting us to issue an import letter of credit, each transaction will be flagged
as an "open account" payment type.
When we receive import documents, we will review them according to your purchase
order terms. If and as provided by the open account payment type selected by you, we
will match the import documents against the pertinent purchase orders housed on our
electronic database in accordance with the parameters established by you and accepted
by us. We will pay the presenting vendors as provided under the open account payment
type selected by you from the following three types:
• importer matching - you match the import documents against your copy of the
pertinent purchase order and instruct us how much to pay to the presenter and when
to pay;
• bank matching - we match the import documents against our electronic file of the
pertinent purchase order, following the parameters established by you; we then �
49
�
electronically inform you, indicating whether they are compliant or non-compliant, and
await your payment instructions; and
auto-pay - we match the documents as described above, and, if we determine they are
compliant, make payment to the presenter, but only if you have sufficient Collected
and Available Funds in the account you have designated for such purposes; if we
determine that the documents are non-compliant, we make payment only upon your
express instructions.
Notification of Open Account Transactions. With respect to open account notification
letters, we will notify you electronically of (i) our recei t of such notices namin
vendor and ii an p g you as
�) y payments made pursuant to drawings under such open account
transactions. We will notify your vendors by Trade Direct, fax, courier or mail as
instructed by you.
STANDBY AND IMPORT LETTERS OF CREDIT
Our Electronic Trade Letters of Credit Service allows you to request us, by electronic or fax
transmission, to issue an import or standby letter of credit or a guarantee. Each letter of
credit or guarantee which we agree to issue will be for your account or the account of
another entity you designate. Each commercial letter of credit we issue will be subject to
the UCP and, when applicable, the eUCP, and each standby letter of credit we issue will
be subject to the ISP98. As a condition to our agreement to issue a letter of credit or
guarantee, we may require you at any time to make with us a cash deposit, which may
not accrue interest or earnings credit, and to grant us a security interest in the underlying
goods and documents of title and/or any other property or accounts as we reasonably
determine as security for your obligations to us. A letter of credit may be issued by any of
our authorized ofFices within or outside the United States of America. A guarantee may
be issued by any of our authorized o�ces outside the United States of America.
YOUR RESPONSIBILITIES
You represent and warrant to us as of the date of issuance of each import letter of credit
and each drawing that:
• You or the importer has obtained all import and export licenses, registrations, filings
and approvals required by any governmental authority for the goods and documents
described in the letter of credit.
� The transactions underlying the letter of credit are not prohibited under the foreign
asset control or other regulations of the United States of America or the app(icable
laws of any otherjurisdiction.
You will obtain, or cause to be obtained, insurance covering fire and other usual risks on
all goods described in each import letter of credit issued by us.
You will reimburse us upon demand all monies paid by us under or in respect of each
, such letter of credit or guarantee, including payments on any draft, acceptance, order,
instrument or demand drawn or presented under the letter of credit or guarantee. You
50
will pay us
on demand interest on all amounts paid by us or any other drawee under •
each letter of credit or guarantee from the date of such payment until we receive
reimbursement at a rate per annum specified in the applicable User pocumentation.
You will reimburse us in the currency in which the letter of credit or guarantee is
denominated (or, at our option, the equivalent of the denominated currency amount in
U.S. Dollars or the currency of the country in which the letter of credit or guarantee was
issued at the rate of exchange quoted by us in the city in which the letter of credit or
guarantee was issued for the sale of the denominated currency against U.S. Dollars or
such other currency on the date on which the denominated currency amount is paid by
us). Regardless of the expiration of the letter of credit or guarantee, you will remain liable
for all such amounts until we are released from liability to all persons entitled to draw or
demand payment under the letter of credit or guarantee.
You will pay us Legal Expenses incurred by us in connection with each letter of cred U to
guarantee including without limitation our defense of any proceeding initiated by y
enjoin payment or negotiation by us of a letter of credit or guarantee even if you are
awarded such relief, provided only that we have acted in good faith in defending such
action.
If you request the issuance of a letter of credit or guarantee listing one of your
Subsidiaries or another entity as the a� tter ofcredit or gua anteeuand youbwill asslume d
a request by you for the issuance of a le •
all liabilities and obligations with respect to such letter of credit or guarantee. You
represent and warrant to us that you will derive substantial economic benefit from each
underlying transaction relating to each request for the issuance of a letterYour edit or
guarantee listing your Subsidiary or another person as the account party.
obligations under each letter of credit or guarantee will not be released or discharged if:
• We attempt to collect any payment under such letter of credit or guarantee directly
from the Subsidiary or such other entity.
• Any bankruptcy, reorganization, insolvency, receivership, moratorium or other such
action effecting creditors generally is filed by or against the Subsidiary or such other
entity.
• We receive payment from the Subsidiary or such other entity, but it is subsequently
rescinded or must be returned by us.
OUR RESPONSIBILITIES
If we accept your request, we will issue the import or standby letter of credit as described
in your electronic or fax transmission and pursuant to this Booklet and the UCP (with
regard to import letters of credit) and ISP98 (with regard to standby letters of credit). If
we accept your request, we will issue the guarantee as described in your electronic or fax
transmission and pursuant to this Booklet.
We will pay each commercial letter of credit pursuant to its terms, this Booklet and the
UCP. We will pay each standby letter of credit pursuant to its terms, this Booklet and the ,
ISP98. We will pay each guarantee pursuant to its terms and this Booklet.
51
• CHANGE OF LAW OR REGULATION
If, subsequent to the issuance date of a letter of credit or guarantee, we determine that
the introduction of or any change in the interpretation of any law, rule, regulation or
guideline or the request of a central bank or other governmental authority will increase
our costs relative to our providing the Electronic Trade Letters of Credit Service, as set
forth below, then, on demand, you will pay us additional amounts su�cient (as
determined by us) to compensate us for such increased cost. Such increased costs could
include: (i) reserve, deposit, assessment or similar requirements or (ii) increases in
capital adequacy requirements.
DEPOSIT ON TERMINATION EVENT
If there occurs an event which permits us, under the Termination section of this Booklet,
to terminate this Service immediately, you will deposit with us, on demand and as cash
securiry for your obligations to us, an amount equal to the aggregate undrawn amount of
the letters of credit and guarantees issued by us in the same currency as the letter of
credit or guarantee, or, at our option, its equivalent in U.S. Dollars or the currency of the
country in which the letter of credit or guarantee was issued. You will not withdraw any
amount so deposited except to the extent such amount exceeds the undrawn and
unreimbursed amount of the letter(s) of credit and guarantees. If the amount deposited
by you under this Booklet for a letter of credit is in a currency different than the currency
in which the letter of credit or guarantee is payable and the amount so deposited
� becomes less than the value of the undrawn amount of the letter of credit or guarantee
because of any variation in rates of exchange, you will deposit with us additional
amounts in such other currency so that the total amount deposited by you under this
Booklet is not less than the equivalent value of the undrawn amount of the letter of
credit or guarantee, determined by using the rate of exchange quoted by us on the date
of our latest demand.
SUPPLEMEIVTAL LIMITATION OF LIABILITIES AND INDEMNIFICATION FOR ALL ELECTRONIC
TRADE SERVICES
For each Electronic Trade Service, this section supplements the Limitation of Liability
section of this Booklet.
You have sole responsibility for determining the level of security you require and
assessing the suitability of the security procedures for these Services. We have no duty
to investigate the authenticity of any application, instruction or other communication you
provide us using an Electronic Trade Service. Also, we will have no liability to you for
acting upon any application, amendment or other communication purportedly
transmitted by you, even if such application, amendment or message:
• Contains inaccurate or erroneous information.
• Constitutes unauthorized or fraudulent use of an Electronic Trade Service.
• • Includes instructions to pay money or otherwise debit or credit any account.
• Relates to the disposition of any money, securities or documents.
�
• Purports to bind you to any agreement or other arrangement with us or with other •
persons or to commit you to any other type of transaction or arrangement.
We are authorized, but not obliged, to rely upon and act in accordance with any
application, instruction, consent or other communication by fax or other electronic
transmission (including without limitation any transmission by use of our Software or the
internet) received by us purporting to be a communication on your behalf without inquiry
on our part as to the source of the transmission or the identity of the person purporting
to send such communication. We are also authorized, but not obliged, to rely upon and
act in accordance with any application, instruction, consent or other communication by
telephone, purporting to be a communication on your behalf by an authorized person
designated by you.
�
•
�
\ J
��
�
�
GENERAL PROVISIONS
CHANGES TO A SERVICE
You may request us at any time to change the processing instructions for any Service. We
are not obligated to implement any requested changes until we have had a reasonable
opportuniry to act upon them. In making changes, we are entitled to rely on requests
purporting to be from you. For certain changes, we may require that your requests be in
writing, in a form and manner acceptable to us, or be from an authorized person you
designate. In addition, certain requests for changes may be subject to our approval.
We may change, add or delete any of the terms and conditions applicable to any or all
Services upon 30 days prior notice to you in writing or by electronic means. Your
continued use of or failure to terminate any Service, after the effective date of the
change, will indicate your agreement to the change.
COMMUNICATIONS
Any written notice or other written communication to be given under the terms of this
Booklet will be addressed to the applicable address specified on the Authorization and
Agreement form you return to us, except as you or we specify otherwise in writing in
conjunction with your accounts or particular Services. Notices are efFective upon receipt,
except as otherwise provided in this Booklet or any Materials.
You agree that we may electronically monitor and/or record any telephone �
communications with you in those countries which permit that practice. If our records
about any such communication are different from yours, our records will govern.
If you choose to use unencrypted electronic mail to initiate payment requests or other
instructions or otherwise communicate with us, your use of such electronic mail with
respect to a Service will be subject to the terms and conditions of this Booklet and will
comply with the applicable User pocumentation. In addition, you agree to bear the
risk that such electronic mail may be corrupted, modified, garbled or hacked or its
confidentiality may be breached by a third party and the risk that we will rely on such
mail, which appears to be from you but which is unauthorized, and that such reliance will
result in a loss.
CONFIDENTIALITY
OUR OBLIGATION
We acknowledge that information we obtain from you in connection with any Service we
provide to you under the terms of this Booklet may be confidential. We will maintain the
confidentiality of such information in accordance with our normal procedures for
safeguarding customer information and the policy reflected in the Bank of America
Corporation Code of Ethics.
•
m
• YOUR OBLIGATION
You acknowledge our claim to proprietary rights in the Materials and that the Materials
constitute our "trade secrets" or trade secrets of our licensors or vendors. You
understand that all Materials are confidential and you will:
�
• Safeguard the Materials at all times.
• Establish and maintain procedures to assure the confidentiality of the Materials and
any password or code subsequently changed by you.
• Use the Materials only for the purposes for which we provide them.
• Notify us promptly by telephone, confirmed in writing, if any Materials are lost or their
confidentiality is compromised.
You will not, nor will you allow anyone else to, do any of the following without our prior
consent:
Disclose any Materials to any person or entity, except to your employees and agents
with a need to know the Materials.
Make any copies, in whole or in part, of any Materials in whatever form or medium
(electronic, printed or otherwise) in which they may exist from time to time, except as
provided in the Software License section.
Translate, reverse engineer, disassemble or decompile any Software or security
devices.
These confidentiality obligations continue after a Service you are using is terminated.
You have sole responsibility for the custody, control and use of all Materials. You agree
that no individual will be allowed to initiate a request or other instruction contemplated
in this Booklet or to have access to any Materials without proper supervision and strict
security controls. If a Service requires use of user identification codes or passwords, we
will be fully protected in relying on the correct user identification codes and passwords,
as described in the relevant User pocumentation.
GENERAL
This section does not limit either party's ability to disclose information (i) that the other
party has approved by prior writing for disdosure; (ii) that is disclosed to its professional
advisors or auditors; (iii) that becomes public other than through a breach of these
confidentiality obligations, (iv) that was in its possession or available to it from a third
party prior to its receipt of it in connection with any Service, (v) which is obtained by it
from a third party who is not known by it to be bound by a confidentiality agreement with
respect to that information, (vi) as required or requested by any securities exchange or
regulatory body to which either party is subject or submits or (vii) as otherwise required
to be disclosed by law or by legal or governmental process.
In addition, you agree (i) that we may disclose to our offices, affiliates, officers,
� employees and agents with a need to know any information we obtain about you and (ii)
m
that those offices, affiliates, officers, employees and agents may disclose such •
information as permitted underthe immediately preceding paragraph.
You acknowledge and agree that data processing related to Services covered by this
Booklet and your associated accounts may take place in countries other than those
where you and your accounts with us are located. You further understand that
information concerning your relationship with us may be available on our electronic data
system both for information management purposes and in order to enable you to benefit
from our electronic banking services. You understand and agree that, as a result, your
banking relationship information may be available to some of our officers outside the
country or countries where you and your accounts are located. You authorize us to
transmit your banking relationship information across national borders, notwithstanding
the banking secrecy laws of any of the countries involved, as necessary or appropriate to
provide any Senrices.
It is possible that in providing the Services we will transmit Personal Data. We will only
transmit Personal Data to our locations, to locations of our affiliates or to others in order
to provide the Services. We may contract with others to provide data transmission or
storage services to us. In that case, we will require that they treat Personal Data solely in
accordance with our instructions. You agree to comply with any directions we may give
you from time to time with respect to the Personal Data.
Neither party will use the other's name or refer to the other party directly or indirectly in
any solicitation, marketing material, advertisement, news release or other release to any �
publication without receiving the other party's specific prior written approval for each
such use or release, except that we may use your name as a reference in service
proposals if we obtain your prior oral approval for such use.
These obligations continue after any Service you are using is terminated.
CURRENCY EXCHANGE RATES
If a Request, an Entry, a check issued under the Check Issuance Services or a draft
created under the Client-Printed Drafts Services involves a currency other than the
currency in which the relevant account is denominated, your funds will be exchanged for
such other currency at a current rate of exchange on or before the transfer or debit date,
as the case may be, in accordance with our normal procedures (including applicable User
Documentation). Currency exchange rates fluctuate over time, and you acknowledge and
accept the risks of such fluctuations: (i) in the case of Requests, between the time you
initiate a Request and the time the transfer is either completed or is unwound due to a
cancellation, amendment, rejection or return, (ii) in the case of checks, between the time
you request us to create a check and the time we debit your account to cover such check
and/or the time we re-credit your account if the check is stopped in accordance with the
applicable stop payment procedures and (iii) in the case of drafts, between the time you
print a draft, or request us to print a draft, and the time we transfer funds from your
account to cover such draft. •
�
• FACSIMILE SIGNATURES
In some countries, businesses use a variety of techniques to produce a facsimile
signature manually or by means of a device or machine (each generally called a facsimile
signature) as a convenient method for signing checks, documents and other items. If you
choose to use a facsimile signature, you must provide us with a specimen of each
facsimile signature.
You are responsible for any withdrawal from your deposit account that bears or
reasonably appears to us to bear your facsimile signature, regardless of by whom or by
what means the signature was placed on the check. If you choose to use a facsimile
signature, you are responsible even if you have not presented us with a specimen
facsimile signature, or if the size, color or sryle of the check, or the size, color or style of
the facsimile signature is difFerent from that of the check or facsimile signature you use.
We may pay the withdrawal and debit your account for it.
You agree to compensate us for all losses, claims, damages or expenses, including
Legal Expenses, that result from our payment of a withdrawal bearing a facsimile that
reasonably resembles your facsimile signature.
You are responsible for taking security measures and implementing procedures to
prevent the forgery, theft or fraudulent or unauthorized use of your facsimile signature.
� GENERAL MATTERS
AGREEMENT
Except with respect to a click-wrap online privacy policy to which you agree when you use
a Service through Bank of America DirectOO , this Booklet constitutes and represents the
entire agreement between you and us regarding the Services we provide you anywhere in
the world and supersedes and extinguishes all prior agreements, understandings,
representations, warranties and arrangements of any nature (including requests for
proposals and other sales material), whether oral or written, between you and us relating
to any such Service (including any International Treasury Services Terms and Conditions
booklet, but excluding the current Account Agreement). This Booklet will be controlling in
the event of any conflict between it and any relevant User pocumentation, any other
document or written or oral statement (including but not limited to any Account
Agreement, except as applicable law requires otherwise), but excluding the click-wrap
online privacy policy noted above. Current User pocumentation is available upon request.
This Booklet is binding upon each of your and our respective successors and permitted
assigns. You may with our prior written consent, assign any of your rights or duties
described in this Booklet. This Booklet is not for the benefit of any other person, and no
other person has any right under this Booklet against you or us, and nothing contained
in this Booklet creates any agency, fduciary, joint venture or partnership relationship
between you and us.
� NOTICE OF FINAL AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
m
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. •
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
GENERAL OBLIGATIONS
We are responsible only for performing the Services expressly provided for in this
Booklet. We may contract with an outside vendor in providing any of these Services.
With respect to any Service, we will provide you with assistance by telephone at the
numbers and during the hours specified by us in writing from time to time.
You are responsible for maintaining the security of your data and ensuring that it is
adequately backed-up. We are not responsible for your loss of your data.
ORAL INSTRUCTIONS
Except as otherwise provided in this Booklet with respect to compliance with any
applicable Security Procedure, we may rely on oral instructions from any person who
identifies himself or herself by a name which is included on a written list from you of
persons authorized to give such instructions. You will update this list from time to time
as necessary to reflect any changes in authorized persons. Except as otherwise expressly
stated in this Booklet, we are not required to act on any instruction from any person or to
give notices to any person.
SEVERABILITY; NO WAIVER
If any provision of this Booklet or the application of any such provision to any person or
set of circumstances is determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Booklet, and the application of such provision to persons or
circumstances other than those as to which it is determined to be invalid, unlawful, void
or unenforceable, are not impaired or otherwise afFected and continue to be valid and
enforceable to the fullest extent permitted by law.
No delay or failure to exercise any right or remedy under this Booktet is deemed to be a
waiver of such right or remedy. No waiver of a single breach or default under this Booklet
is a waiver of any other breach or default. Any waiver under this Booklet must be in
writing.
GOVERNING LAW
Except as otherwise expressly provided in this Booklet for a particular Service, with
respect to each Service, this Booklet is governed by and interpreted according to (i) U.S.
federal law and (ii) the law of (A) the state in the United States of America in which the
account (or the principal account, in the case of multiple accounts) associated with such
Service is located or, if there is no such state or no account associated with such Service,
(B) the State of New York, without reference to the principles of conflicts of law of the
U.S. and of such state.
If you are headquartered, or are using a Service, outside the United States of America,
and if requested by us, you must appoint an agent for service of process in England,
Hong Kong, Singapore and/or the United States of America, and you irrevocably agree •
�
• that any writ, summons, order, judgment or other document relating to or in conjunction
with any proceeding, suit or action may be served on you in such jurisdiction.
LIMITATION OF LIABILITIES
ALL SERVICES OTHER THAN ELECTRONIC FUNDS TRANSFER SERVICES
We are liable to you only for actual damages incurred as a direct result of our failure to
exercise reasonable care in providing a Service.
ELECTRONIC FUNDS TRANSFER SERVICES
For Requests and Entries which are subject to UCC 4A, we are liable only for damages
required to be paid under UCC 4A or the Fedwire Regulation, as applicable, except as
otherwise agreed in this Booklet.
For all Requests and Entries not subject to UCC4A and for all other obligations under the
Electronic Funds Transfer Services sections, our liabiliry is limited to actual damages,
resulting directly from our willful misconduct or our failure to exercise reasonable care,
not exceeding the following, as applicable: (i) in case of an excessive debit to your account,
the amount of the excess plus compensation equivalent to interest; (ii) in case of payment
to an account not specified by you, the amount of the payment plus compensation
equivalent to interest; (iii) in case of any delay in crediting a debit Entry or DTC to your
account, the amount of compensation equivalent to interest for the period of delay; or (iv)
in all other cases, the actual damages incurred by you. You will use reasonable efforts to
� assist us in recovering the amount of any overpayment for which we are liable.
If we are obligated to pay interest compensation, we will pay such compensation or
credit your account, as we determine, upon your written request. We calculate
compensation for the relevant period as specified in the Account Agreement or as
advised by your customer services representative.
If you transmit a Request to us by way of a funds-transfer system or other third-party
communications system not specifically required by us, the system is deemed to be your
agent for that purpose. We are not liable to you for any discrepancy between the terms
you transmit to such system and the terms it then transmits to us.
ALL SERVICES
In no event will we be liable for any indirect, consequential or punitive loss, damage,
cost or expense of any nature or any economic loss or damage, expense and loss of
business, profits or revenue, goodwill and anticipated savings, loss of or corruption to
your data, loss of operation time or loss of contracts, even if advised of the possibility of
such loss, damage, cost or expense.
We will not be responsible for the acts or omissions of you or your officers, employees or
agents (including but not limited to the amount, accuracy, timeliness or authorization of
any instructions or information from you) or the acts or omissions of any other person or
entity, including but not limited to any clearing house association or processor, any U.S.
� Federal Reserve Bank or any other country's central bank, any other financial institution
or any Supplier, and no such person or entity will be deemed our agent.
60
C��'1�:�� 7� 1��
If you permit any Subsidiary or other person to access one of our Service installations •
on your premises through use of a remote access software package, we will not be
responsible or liable for such Subsidiary or person's use or misuse of our Services or
access to accounts owned by you and for which you did not authorize that Subsidiary or
person to have access via your installation. We may and will treat all instructions and
information received by us through this arrangement as provided by and for the benefit of
you and subject to all our rights under this Booklet with respect to the pertinent Services.
We will not be liable for and will be excused from any failure or delay in performing our
obligations for any Service if such fai(ure or delay is caused by circumstances beyond our
control, including any natural disaster (such as earthquakes or floods), emergency
conditions (such as war, riot, fire, theft or labor dispute), legal constraint or governmental
action or inaction, breakdown or failure of equipment, breakdown of any Supplier, or
your act, omission, negligence or fault.
We also will not be liable for any failure to act on our part if we reasonably believed that
our action would have violated any law, rule or regulation.
With respect to a Service, we may, at our sole discretion, allow an overdraft to occur in
your account. Except as we agree or advise you otherwise in writing, you must repay us
immediately, without demand, the amount of such overdraft plus any overdraft charges.
In such cases, the fact that we previously allowed an overdraft to occur does not obligate �
us to do so in the future. Additional terms and conditions contained in your Account
Agreement may apply.
PAYMENT FOR SERVICES
You must maintain and designate account(s) with us which we will use for debiting or
crediting with respect to all payments and deposits and related adjustments and
charges. Except as otherwise provided, you must have Collected and Available Funds on
deposit in your account(s) sufficient to cover such obligations. For purposes of satisfying
your payment obligations, we may consider any overdraft line of credit or other
arrangement you have with us.
SERVICE CHARGES
You will pay us for each Service you use according to our schedule of charges currently in
effect for you, except as we agree otherwise (in writing) from time to time. At your
request, we will provide you a copy of the current schedule of charges for the applicable
Service. All charges are subject to change upon 30 days prior written notice to you
(unless otherwise agreed in writing), except that any increase in charges to offset any
increase in fees charged to us by any Supplier for services used in delivering any Service
may become efFective in less than 30 days.
You will pay us for Software support in excess of that contemplated in the General
Provisions sections of this Booklet. The charges for such extra support will be as �
61
� specified by us before such charges are incurred or as otherwise agreed by you and us
from time to time.
We will, on a monthly basis, debit your account with us for payment of charges due,
unless you arrange another payment procedure acceptable to us.
TAXES
All Senrice charges are exclusive of sales, value-added and use taxes, stamp and other
duties and other governmental charges imposed on any Service or Materials and not
based on our net income. Such taxes, duties and charges are payable by you.
PROTECTION FROM THIRD PARTIES
You will indemnify us against and hold us harmless from and defend us against any and
all liabilities, claims, costs, expenses and damages of any nature (including Legal
Expenses) arising out of or relating to disputes or legal actions by parties other than you
and us concerning any Service. The obligations contained in the preceding sentence will
continue after a Seroice you are using is terminated. This section does not apply to any
cost or damage attributable to our gross negligence or intentional misconduct.
REPRESENTATIONS AND WARRAWTIES
On and as of each day we provide any Service to you, you represent and warrant to us
� that:
• Your agreement to each provision contained in this Booklet is a duly authorized, legal,
valid, binding and enforceable obligation;
• The debiting of any account as provided in this Booklet is not inconsistent with any
restriction on the use of that account;
• All approvals and authorizations required to permit the execution and delivery of the
Agreement and Authorization form and any other necessary documentation, and the
performance and consummation by you of the transactions contemplated under each
Service, have been obtained, induding but not limited to due authorization from each
applicable third party to allow you to transfer funds and access information from such
party's account;
• Your performance of your obligations will not violate any law, regulation, judgment,
decree or order applicable to you; and
• There is no lawsuit, tax claim or other dispute pending or threatened against you
which, if lost, would impair your financial condition or ability to pay us under the
terms of this Booklet.
RESOLUTION OF DISPUTES
• We try to resolve our clients' Service problems or disputes as quickly as possible. In most
cases, we can resolve a problem by telephone.
62
Any dispute or controversy concerning your use of Services described in this Booklet will •
be decided by binding arbitration conducted in the United States of America (except as
you and we expressly agree otherwise) in accordance with the United States Arbitration
Act (Title 9, U.S. Code) under the Commercial Arbitration Rules of the American
Arbitration Association. Underthese procedures, the dispute is submitted to a neutral
person for determination in place of a trial before a judge or jury. Judgment upon the
award made by the arbitrator may be entered in any court having jurisdiction.
Without regard to the foregoing, any dispute or controversy that arises from an Electronic
Funds Transfer Service will be decided by a judge without a jury in a United States of
America federal or state court (except as you and we expressly agree otherwise in
writin�. This means that in these instances you waive any right to a trial by jury in any
action or proceeding and agree that such action or proceeding will be tried before a
judge without a jury.
Either you or we may exercise self-help remedies or obtain provisional or ancillary
remedies from a court. You or we may exercise or obtain these remedies at any time,
even while the arbitration or trial by a judge is pending. By exercising or obtaining any
such remedies, neither you nor we waive the right to request that a dispute or
controversy be decided by arbitration or trial by a judge.
SOFTWARE LICENSE
This section applies to all Software we provide to you afteryou return the Agreement
and Authorization form unless we provide you a separate license agreement for specific
Software (including a"click-wrap" Software license you may obtain from us by
downloading from ourwebsite and including, in the case ofthe Commercial and
Corporate Card Services, the licenses forVisa InfoSpan, MasterCard SmartData and any
other third-party Software we provide you in connection with such Services).
Notwithstanding anything to the contrary in the "General Provisions" section of this
Booklet, the software licenses granted to you under this Software License section are
governed by and interpreted according to the laws of the State of California without
reference to its principles of conflicts of law.
LICENSE
For each Software application we provide to you for one or more Services, we grant you
a non-exclusive, non-transferable license for the use of that Software and its related
Materials. Each license is granted solely for use in object code form only in connection
with one or more Services. You may use the Software only in accordance with the
applicable User pocumentation.
The Software, its source code, the related Materials and all copyright, patent, trademark,
trade secret and other rights in them are and will remain the exclusive property of us or
our licensors. You will secure and protect the Software (including all copies) in a manner
consistent with the maintenance of our rights and those of our licensors. In order to
protect those rights, you will reproduce and incorporate copyright notices and all other �
proprietary legends prescribed by us in any permitted copies. You may not remove,
63
• obscure or otherwise tamper with or alter any such notices or legends afFixed to or
otherwise contained in the Software or related Materials or copies. You will also take
appropriate action to instruct and obligate your representatives who are permitted
access to the Software (including copies) to comply with your obligations to protect the
Software.
We are obligated to provide you only with those updates, upgrades or new releases of
Software which we make generally available to our other customers who license the
same Software. Any corrections, updates, upgrades or new releases that we provide to
you must be installed by you promptly or by such later time as we specify, and will be
deemed part of the Software upon delivery to you. We will provide support only for the
most current version of Software we have provided to you.
You will, at your expense, cause a computer to be installed and kept in good condition
and working order at your site for use of the Software. The computer and its components
must be equipment which is acceptable as specified by us from time to time.
We may assist you with the installation of Software on your computer and with the
training of persons who will use the Software, but we will not bear any responsibiliry for
the proper installation and use of the Software. Except as you and we may agree
otherwise, you will be deemed to have accepted the Software upon its installation and
upon our having made such training available to you.
� You may not (i) sell, assign, transfer, license, sublicense or publish the Software or
copies of the Software or (ii) disclose, display or otherwise make available the Software
or copies thereof to third parties without our express approval.
You may not copy, or allow anyone else to copy, the Software or related Materials, except
that you may make two copies for backup and archival purposes. You may not
electronically distribute, or allow anyone else to electronically distribute, Software except
from the network server on which it is installed to workstations on that network.
You will provide us notice, in writing or by electronic means approved by us for such
purpose, each time you make a permitted copy of Software (except for backup or archival
copies) or electronically distribute it to a workstation, indicating the location and date of
the copy or distribution. We may audit your site to confirm compliance with this Software
License section if you fail to make the reports called for or if we reasonably betieve you
are using unauthorized copies of Software.
You may not alter, repair, modify or adapt any Software or related Materials, including,
but not limited to, translating, reverse engineering, decompiling, disassembling or
creating derivative works from it.
You agree to inform our client support unit of all errors, difficulties or other problems
with the Software of which you become aware. We will make reasonable efforts to fix or
provide workarounds for material reported errors and to provide you with support and
consultation concerning the Software. The reasonable effort, support and consultation
. will be such as we, in our sole discretion, determine. You will cooperate with us in the
expeditious resolution of such errors, difficulties or other problems by providing us, on
64
request, a listing of input, output and all other data which we may reasonably request in •
order to reproduce operating conditions similar to those present when such errors,
difficulties or other problems were discovered.
You may move the Software to another computer replacing the one on which the
Software was originally installed or to another site, but only after you give us notice, in
writing or by electronic means approved by us for such purpose, specifying the new
computer and site. We will have reasonable access to Software while it is at your site to
provide assistance or to verify the status or location of Software.
A license to Software and related Materials will terminate automatically if you breach a
material term of the license or if the Services for which you are using the Software are
terminated. In addition, in the event of a breach of your confidentiality obligations with
respect to the Software, we may seek any remedy provided by law or equity.
LIMITED WARRANTY/DISCLAIMERS
You acknowledge that the Software has not been produced to meet your specific
requirements and has not been tested in every possible combination and operating
environment. You are responsible for satisfying yourself that the Software is satisfactory
for your purposes.
You further understand and agree that we make no representation concerning the
completeness, accuracy, operation or performance of the Software or its compatibility
with any hardware. You acknowledge that the operation of the Software may not be �
uninterrupted or error-free.
We warrant that the Software will substantially conform to the documentation provided
with the Software for a period of 60 days after delivery to you provided that: (i) the
Software is used by you in strict compliance with the terms of this Booklet and the
related Materials, (ii) the Software is not modified in any way by you and (iii) you
promptly notify us and reproduce for us any defects, errors or bugs in the Software. We
will use reasonable efforts to correct or work around any Software errors reported by you
or, at our discretion, but in any event if our efforts are unavailing, we will accept return of
the Software and refund any license fees paid by you.
You agree that the foregoing is your sole and exclusive remedy for breach of warranty and
our sole obligation in connection with the performance or operation of the Software and
related Materials.
Except as specifically stated above and in the Infringement Indemnity subsection below
and notwithstanding any other provision in this Booklet or otherwise, we make no
representation or warranty, express or implied, written or oral, and, to the full extent
permitted by law, disclaim all other warranties induding, but not limited to, the implied
warranties of inerchantability or fitness for a particular purpose, regarding the Software,
the related Materials and all other property, services or rights covered by this Booklet.
To the extent permitted by applicable law, and except as otherwise provided in this
section, we will not be liable for damages of any kind arising out of the use of, or •
inability to use, the Software or accompanying documentation.
65
• You agree that the United Nations Convention on Contracts for the International Sales of
Goods will not apply to our provision to you or your use of any Software.
Neither you nor we limit or exclude our liability to the other for death, personal injury,
willful misrepresentation, willful default or fraud.
INFRINGEMENT INDEMNITY
Notwithstanding your indemnity of us in the "Protection From Third Parties" section of
this Booktet, we will defend at our own expense or settle any action brought against you
to the extent it is based on a claim that your use of the Software and/or Materials
provided by us to you pursuant to this Booklet infringes any Berne Convention country
copyright or any United States ofAmerica or United Kingdom patent, trade secret or
trademark of any third party, and we will pay all costs and damages finally awarded in
any such action.
Our obligation is subject to (i) prompt notice from you of any such claim or action, (ii) your
not having made any admission of liability or agreed to any settlement or compromise,
(iii) your providing to us, in a prompt and timely manner, the documents, information and
assistance we reasonably request, (iv) our having sole control of defending such claim or
action, (v) your having used the current version of the Software and Materials, as provided
to you by us, in compliance with the terms of this Booklet and the related Materials and
(vi) our obligations under this indemniry being our only obligations to you with respect to
any infringement claim in connection with your use of the Software.
� EXPORT CONTROLS
You understand and acknowledge that our obligations to provide the Software, technical
assistance, any media in which any of the foregoing is contained, training and related
technical data (collectively "Data") will be subject in all respects to all applicable laws
and regulations as shall from time to time govern the export or diversion of certain
products and technology to and from certain countries. You warrant and agree that you
will comply in all respects with the export and reexport restrictions applicable to the Data
shipped to you and will otherwise comply with all applicable laws and regulations
governing export and diversion of the Software and technical data in effect from time to
time.
SUPPLEMENTAL IMAGE CD-ROM SOFNVARE LICENSE PROVISIONS
This subsection supplements this Software License section with respect to Software we
provide you for the Disbursement Image Service under which we provide you with
CD-ROMs and shall control in the event of conFlict between it and the balance of the
Software License section.
We warrant for a period of 45 days after the CD-ROM creation date appearing on the
CD-ROM that such CD-ROM itself will be free of defects in material and workmanship. If
we provide you a CD-ROM which contains a media defect or is unreadable in its entirety,
you must notify us within the 45-day period.
• Our disclaimer of warranties in this Software License section applies to CD-ROMs as well
as to the Software and related Materials.
66
You may not electronically distribute the Image CD-ROM Software to any workstation •
other than the one for which such Software is originally installed on your site.
Notwithstanding anything to the contrary in the Termination section of this Booklet, if a
Disbursement Image Service under which we provide you with CD-ROMs is terminated for
a reason other than your breach of this Software License section, you may continue to
use the Software for such Service after termination of such Service for six months, or for
such longer period as we approve, subject to the terms of this Software License section
or such other software license agreement as we, at our election, require you to sign for
this purpose. At the end of such six-month or longer period, the license for your use of
the Software for such Disbursement Image Service will then terminate automatically.
SUPPLEMENTAL IMAGE (POSITIVE PAI� SOFTWARE LICENSE PROVISIONS
This subsection supplements this Software License section with respect to Software we
provide you for the Image Positive Pay Service and shall control in the event of conflict
between it and the balance of the Software License section.
You may not electronically distribute the CCR (C Compression Routines) Software for
Windows 3.1 provided to you in connection with the Image Positive Pay Service to any
workstation other than the one for which such Software is originally installed on your
site.
TERMINATION
Either you or we may terminate any or all Services upon 30 (60 in the case of Corporate ,
Card Services) calendar days prior written notice to the other party. Notwithstanding the
foregoing sentence, we may terminate any or all Services effective immediately, and we
will send you notice of the termination, if any of the following occurs:
• You breach any of the terms and conditions in this Booklet or any other agreement
with us;
• You terminate, liquidate or dissolve your business or dispose of a substantial portion
of your assets;
• You fail generally to pay your debts as they become due;
• You, voluntarily or involuntarily, become the subject of any bankruptcy, insolvency,
reorganization or other similar proceeding;
• You initiate any composition with your creditors;
• You experience a material adverse change in your financial condition or your ability to
perform your obligations under the terms and conditions in this Booklet; or
• Any guaranty of your obligations to us terminates, is revoked or its validity is contested
by the guarantor, or any of the events set forth in the above five bullet points
attributable to you occur to the guarantor.
If a Service you are using is terminated for any reason, you will do the following: •
67
• • Immediately stop using any Materials relating to the terminated Service;
• Erase or delete any Software we have provided relating to the terminated Service to
the extent it is stored in your computers; and
At our option, either return to us or destroy all Materials relating to the terminated
Service and certify to us that you have done so.
These obligations will continue after a Service you are using has been terminated.
Termination of a Service you use does not affect your payment obligations for services
we provide to you before the Service is terminated, and any such termination is in
addition to our other rights under appticable law and under the terms of this Booklet.
Also, termination of any Service you use does not release you or us from any of our
respective obligations which arose or became effective before such termination. Upon
termination, all amounts owed by you and outstanding will become immediately due
and payable.
r�
�_.J
�
68
GLOSSARY OF TERMS
The following are some important terms that appear in this Booklet.
Acteptable Payee. Your name and any other payee name
you provide to us as an acceptable payee for checks to be
processed under the Lockbox Service.
Account Agreement. The current signature card,
International Account Agreement or SAOTC and the
publication(s), as amended from time to time, we provide
you containing terms and conditions applicable to each
deposit, savings or current account for which you use a
Service.
Bi(l Payment Service Provider. Any entity, which may
include us, you authorize to deliver payments, remittance
information and other related data from your customers to
us for the Electronic Bill Payment Consolidation Service.
Business Day. Each day on which the bank or bank office
providing or facilitating a Service is open for business
related to that Service.
Card. Each plastic charge card which we issue for your Card
Account under our Commercial or Corporate Card Services.
Card Account. Each MasterCard or Visa account which we
issue to you or to a Cardholder under our Commercial or
Corporate Card Services, including an account for which
only an account number and no Card is provided.
Cash Advance. Use of a Card Account to obtain cash from a
participating financial institution, merchant or ATM, to write
a Convenience Check or to obtain items readily convertible
into cash, such as money orders, travelers checks, foreign
currency, lottery tickets, casino chips and race-track wagers.
Card Administrator. One or more individuals designated by
you in writing, as our primary contact for the Card Accounts,
who is authorized to take actions necessary or appropriate
to maintain the Card Accounts, including without limitation
designating persons to receive Card Accounts, receiving
communications from us related to the Card Accounts,
requesting the dosure of Card Accounts and otherwise
communicating with us with respect to the Card Accounts.
Cardholder. Your employee or any other person who you
designate in writing and who we approve to receive a Card
Account or a Commercially Prepaid Card. If you or a
Cardholder makes a Commercial Prepaid Card, a Card
Account number or Convenience Check available to another
party, that person will also be considered a Cardholder.
Check Issuance Request. Using the Check Issuance Service,
a message transmitted from you to us requesting us to
issue a check on your behalf drawn on either accounts you
maintain with us or accounts designated and owned by us.
Collected and Available Funds. Funds in an account equal
to the ledger balance minus float which, in our reasonable
determination, are not subject to a hold, dispute or legal
process preventing their withdrawal.
Commercial Prepaid Card. A pre-paid magnetic strip-based
plastic card issue by us for a Cardholder's purchase of
goods or services or for cash withdrawals.
Controlled Disbursement Point. Each bank office
designated by us through which checks issued under the
Controlled Disbursement Service will be cleared or routed.
Convenience Check. A check which we may provide to you
to draw on a Card Account.
Deposit Account. One or more demand deposit accounts
maintained by you with us and used in connection with our
Controlled Disbursement Service.
Depository Transfer Checks (DTCs). Depository transfer
checks and preauthorized checks to debit Receivers'
accounts to accomplish the same purpose as debit Entries.
(Receiver is defined in the NACHA Rules.)
Effective Entry Date. The date specified, in accordance with
the NACHA Rules, on the Entry by the Originator on which
the Originator intends the Entry to be settled. (Originator is
defined in the NACHA Rules.)
Electronic Funds Transfer Services. ACH Services,
International Electronic Funds Transfer Services and Wire
Transfer Services.
C�
�
69
•
Entries. Entries has the meaning provided in the NACHA
Rules and also includes any data for Entries and any
prenotification.
eUCP. The rules for electronic presentation of documents
under the UCP.
Fedwire. The funds transfer system owned and operated by
the Federal Reserve Banks of the United States of America,
but excludes the system for making automated clearing
house transfers.
Fedwire Regulations. Subpart B of Regulation 1 of the Board
of Governors of the Federal Reserve System of the United
States ofAmerica, as amended from time to time.
FX Transaction. A transaction between you and us,
permitted under the Electronic Foreign Exchange Service,
for the purchase of one currency in exchange for the sale of
another currency (including without limitation any foreign
exchange spot, swap or outright forward transaction or
option), including any transaction that effects the
�re-delivery, extension, rollover or splitting of such a
transaction.
FX Request. A request by means permitted under the
Electronic Foreign Exchange Service to enter into an FX
Transaction.
International Actount Agreement. A form of Account
Agreement used in some countries.
International Electronic Funds Transfer Services. Electronic
payment services for transfers to or from your account
outside the United States of America or to or from your
account in the United States of America to or from an
account in a different country. These services include low-
value batch payments made according to multiple requests
within a single electronic data file. International Electronic
Funds Transfer Services exclude ACH Services within the
United States of America and exclude Wire Transfer
services.
s
ISP98. The "International Standby Practices 1998"
developed by the Institute of International Banking Law &
Practice and endorsed and published by the International
Chamber of Commerce or such later revision as may be
adopted and be in effect on the date the subject standby
letter of credit is issued.
Legal Expenses. Reasonabte lawyer's fees, allocated costs
of staff counsel (unless prohibited by applicable law), fees
and expenses of litigation and any other fees and expenses
incurred in enforcing any provision of this Booklet.
LockboxAddress. The post office address we assign to you
or we accept from you for the Lockbox Service.
Materials. The Software, user identification codes,
passwords, codes, keys, test keys, security devices,
embedded algorithms, digital signatures and certificates,
other similar devices and information, User pocumentation
and related documentation we provide to you.
NACHA Rules. The rules of the National Automated Clearing
House Association (induding any other clearing house
rules applicable to automated clearing house transactions),
as amended from time to time.
Payment Advice. Using the Client-Printed Drafts Services,
an electronic message transmitted by you to us advising us
that you have created a draft.
Personal Data. Information we receive from you in
connection with the Services consisting of an individual's
bank accounts or other financial data or identifying a living
individual.
PIN. A personal identification number which a Cardholder
may receive when activating a Commercial Prepaid Card.
RCK. A"Re-Presented Check Entry" as defined in the NACHA
Rules.
Request. A request by means permitted under the relevant
Wire Transfer or International Electronic Funds Transfer
Service to transfer funds to or from a specified account or
beneficiary (including standing instructions) or to amend or
cancel a prior request to transfer funds.
70
Reversal/Deletion Request. A request for a Reversal or a
request to delete a previously delivered Entry.
Reversals. Data for reversing Entries.
SAOTC. Each form of Standard Account Opening Terms and
Conditions used in certain countries as an Account
Agreement.
Security Procedure. Unless we agree otherwise with you,
the applicable security procedure described in the
Materials for your data delivery type or Service for verifying
the authenticity of Entries, Requests, Reversal/Deletion
Requests, Payment Advices, Check Issuance Requests, Stop
Payment Requests, FX Requests or Tax Payment
Instructions.
Service. With respect to a Bank of America Corporation
subsidiary bank, a treasury management service provided
in a specific Bank location and covered by this Booklet.
Software. The programs and data files provided by us for
use on a computer in connection with one or more
particular Services.
Stop Payment Request. A message you send us using the
Online Stop Payment Services, the Check Issuance Services
or the Client-Printed Drafts Services to request that
payment be stopped on a check or draft which, in the case
of the Online Stop Payment Services, must be drawn on an
eligible account you have with us.
Subsidiary. Any entity in which more than 50% of the
ownership interest is owned, directly or indirectly, by you.
The term "Subsidiary" does not include affiliates or other
entities in which 50% or less of the ownership interest is
owned, directly or indirectly, by you.
Supplier. Any private or common carrier communication or
transmission facility, any time-sharing supplier or any mail
or courier service.
SWIFf. The international electronic message-transfer
service known as the Society for Worldwide Interbank
Financial Telecommunication.
Tax Payment Instruttion. An instruction by means
permitted under the relevant Tax Payment Service to pay
any taxes using any of the tax forms specified in the
applicable User pocumentation.
Transaction. The purchase or reservation of goods or
services or a cash advance made or facilitated by use of a
Stored Value Card, a Commercial Card, Convenience Check
or Card Account.
UCC 4A. Article 4A of the Uniform Commercial Code - Funds
Transfers, as adopted by the state in the United States of
America whose law applies to a Service, as amended from
time to time.
UCP. The Uniform Customs and Practices for pocumentary
Credits, 1993 Revision, ICC Publication No. 500 or such
later revision as may be adopted by the International
Chamber of Commerce and be in effect on the date the
subject letter of credit is issued.
Unauthorized Use. Use of a Card Account, Card or
Convenience Card by a person (i) who is not your
Cardholder, employee or agent, (ii) who does not have
actual, implied or apparent authority to use the Card
Account and (iii) whose use does not benefit you directly
or indirectly.
Uniform Rules for Collections. The Uniform Rules for
Collections, ICC Publication No. 522, or such later revision
as may be adopted by the International Chamber of
Commerce and be applicable to a collection.
User pocumentation. Any written information we provide
you, including information in electronic format, as
amended from time to time, which contains detailed
instructions regarding the use of a Service, as provided by
a particular banking center or office. User pocumentation
may vary from one jurisdiction to another. Current User
Documentation is available upon your request.
•
�
�
71
� _;..,� ���
f� � r'
r
;�;,,''�
: �'.
�
,
� "�t
����
;,
�°s�=°. ,
�
Your company has teamed up with Bank of America to bring you an exclusive package
of banking benefits and other services: Bank of America at Work °
■ It a11 starts with Direct Deposit.
Direct Deposit opens the door to a variety of services, accounts and special discounts like:
� Choice of MyAccess Checking�,
free with direct deposit or Advanta,ge°
Checking, free for 6 months with
direct deposit
� Free first order of standard checks
� Second Regular checking account with no
monthly maintenance fee and no direct
deposit requirement
� Free Online Banking Service with
Bill Payi
� Sa�ings account with no monthly
maintenance fee with $25 minimum
monthly auto transfer from checking
� Choice of up to $2,0002 off the
cost of your home purchase with
Bank of America Mortgage Rewards°
or up to $500 credit to closing cost
on new first mortgage3
:� 0.25% interest rate discount on
consumer loans, home equity
loans and lines of credit4
�i No annual fee Power RewardsTM
Visa° Platinum credit card with
500 bonus points with first purchase5
r�. 0.25% interest rate bonus on certain CDss
'� No fee single or dual signature
travelers checks
� Free financial check up9
■ Free access to our Less Stress Moving PackageT" that includes?
� Access to our Address Change Service and Utility Connection Center
:;� Partner offers and helpful info in our Online Movers Resource Center
'� 10% off your next purchase at Lowe's �4
■ Other services available from our affiliates:
�� No-obligation quotes on homeowners, renters and automobile insurance auailable through
Banc of America Insurance Services, Inc. Call 1.866.558.4321 Monday-Friday 8am-8pm EST.9
"''��#' ■ Enroll in direct deposit today and put Bank of America at Work° to work for you.
To staxt enjoying a11 these benefits, visit your local Bank of America banking center,
,'� call 1.800.782.2265 or visit us online at www bankofamerica.com/bankatwork.
See reverse side for important information.
II��
BankofAmerica �HigherStandards
� Other account-related fees still apply.
z For property locations other than Los Angeles and
Orange Counties, California: This offer is a�aila,ble on
certain first mortgages for the purchase of an owner-
occupied 1- to 4-unit dwelling or condominium. Must be
an existing Bank of America customer. Credit is toward
closing costs. No cash paid to borrower. Only one offer
per mortgage applic�,tion. Offer cannot be combined with
any other Bank of America mortgage offer. Disclosed
sauings are based on a loan amount of $200,000 with a
15-year fixed term, a 5.5%o APR, no points, 180 monthly
payments of $1,634.17 each, principal and interest only,
and an SO% LTV. Customary fees and closing costs are
assumed. Your bene£ts may differ depending upon
your loan ainount, terms and selections under the
Mortgage Rewards program. Bank of America vendors
must be used. Credit is subject to approval. Normal
credit standards apply. Offer may change without
notice. Not available in all geographical locations.
Certain restrictions apply. Offer not auailable through
independent mortgage brokers approved to sell
Bank of America mortgage products or via our online
mortgage application.
3 Automatic payment is required on closing cost offer on
new first mortgage. No cash will be given to borrower on
closing cost offer on new first mortgage.
4 Loan discounts apply to new loans and certain types
of loans may be excluded. Automatic payment from a
Bank of America checking account is required for rate
discounts on consumer loans and home equity loans.
Home equity lines of credit are auailable in states
where banking centers are located. Other restrictions
may apply. Flood hazard or property insurance may be
required. See Bank of America for further details.
�� Receive 500 Bonus Points for your first purchase made
within 90 days of enrollment. Credit cards are subject to
approval. Credit cards are issued by Bank of America,
N.A. (USA).
� Interest rate bonus on CDs does not apply to renewals, to
funds transferred from other Bank of America accounts
or to CDs of $100,000 or more.
7 Some of the moving services may be provided by other
companies unrelated to Bank of America. Some services
may not be available at every residential address.
�
� Lowe's�"' is not an aff'iliated company of Bank of America.
Offer available through coupon and is valid on purchases
of up to $10,000 when you use a Bank of America credit
card or Check Card. Certain restrictions apply. See
coupon for details.
`' Insurance is offered through Banc of America
Insurance Services, Inc., doing business as Banc
of America Insurance Agency in NY, a nonbank
subsidiary of Bank of America, N.A.
Insurance is not a deposit or other obligation of th�
bank or any bank a�liate; is an obligation of the
insurance company only; is not guaranteed, issued
or underwritten by the FDIC, the bank or a,x�y bank
a�liate; is not insured by the FDIC or any other
agency of the U.S., the bank or any bank affiliate;
is not condition to the provision or term of any
banking service or activity; need not be negotiated
or purchased through any particular person as a
condition of any financial transaction or service; and
may be purchased from any agent or company and
the customer's choice will not affect current or future
credit decisions.
Eligibility for Bank of America at Work terminates when
(a) you terminate your relationship with the sponsoring
company or organization or (b) the sponsoring
company's or organization's Bank of America at Work
plan is terminated by either the company or organization
or Bank of America, at which time rates and fees will
revert to the current rates and fees as stated in the
Personal Schedule of Fees.
Information is accurate as of 4/30/05.
Bank of Ainerica, N.A. Member FDIC
Equal Housing Lender Q
a0 2005 Bank of America Corporation. All rights reserved.
00-53-0708B
�
�
O
O
�
Q
�
.�
U
�
W
y
�
�I
�
�I
�
�
C
r..i
C
I�I
�
y
�
�
�
O
N
iE
N
�
N
Fr
.�
_�
ai
�
Y
�
�
�
�
%
Q
�C
G
w
e
�.
C
O
a
u
O'
e
0
u
�
q
C
L
�"i
R
>
q Y
� •q �
G a�
x °' aV�'
°�pai
�
�
I.Vi �
vi �
`,3 �� c � W
0
c�d .d v�i `d U ai
c'�i � cca C W �"
c�i.7 � .� �•d �
� Cb ° P. � �
,�, � �n U .r 0.\°''
C� V V c�tl N O,
cY� a`�� y `3p �U
�. y U VI td �' W "
b ^ � +�+ V W �+ `�i'
� `� �3 rL � � '° a`
� c � 0. � � � O
"� �" V E'" a�i a�i �o
w i � �z � � �
E X..� v�aU
d a N �� U� V
'C N �, m G C� �
7 'd y •• p
�
R F� �" � c`Oi � '`� �
Q y� C� "' a� y
�� U• o
,�, � .-: w z i a��i
.� w '� � 'V� U �
AN Q
a`�. p � o` U 8 �a
O� � 4.� �" pv�, x '�
'b
� w [ U ro U v� �
`° °'� . � w° =u w° U u
d0'� N y y
v� c'C c � c � �e
c�tl �n '.� � � � a rCr
y fa+J 7 ` � = C
a�,�Q �� �� �
'y 0 ,� f��. 'd 4. �J y
�?E OD C r`�i. C� t�d C
..V.� � , � � N � l0
s
W U •� � d � a � �
ctl � � � C � c� � £
� � `� E p �.^.�., ��
�
�� °' m� ie aFi � E�
;;� yc yx�z
� �aNO
b C � �E= �Uaz
U � y 'd C '� o �e �
a � � � x � �
UG a � �' � ci � `�
a� e� A � $ �
O a�i 7 O� O��°�
�v Q a� �v�y 'O U � o
l�i .--+ �-Yi Ir t�V � w ai
[� 5 •° [� £ F� c �
� �
� � � � V N �
a
�`a� o a � Q a_ a V
o�o � o a o�� a'd
Uw•° UU UWU �
N N N
� d d �
ae a' �' o
U �
Y
C,I L �
4� d
= a 6i o
V � � 0
,o ; � o
es A" � o
U "�'
�r
9 y �
� a+ y e
U � ee N
� �
V
b0
.d.
A
U
a _
a �
�
a` °'
U
Q Q
z 'z
Q
z z
0 0
0 0
s � v3
e �
vi O
�O O±
i �
i��
�
I W
� '�
� �
��c
� F
N
°c
6
L C
�, O O
= c� �
W �
� � o
w .
b
N,_N. r�n
s° "' �°
�� �
a _
� � �
�
U � `
� O
(]. = N
� � C
.Vi y y
U
� � d
� ? .�
O p
y
.. ;v
d � '>
� N
d y M
� � �
U 'X �
'� � �
� � �
U � �
7 O d
U � ,�
,S�n L C
a.V+
� ��
b � �
� O �
`� ao
� o �°
�o � o�o
� a c
U �
o$
�
pG � e �
�a � � o
,o�a�
� '� � U
F �V o
�a W J� �
b � � �
� y �
H � .°..
N N N
° .c�- o
6�9 6�9 6�9
e e e
T O �
_ o _
0 o g
0 0 0
ds es bs
0 o e
v7i, v ��o,
in
V b
'd l7
1 � � C
°, b ^� o
Un 4' b
i � �
i V � ed •� �O W
� � ^ rti� l. . �
'� c ai
: Q' �q C.j 5 +� .`��j
i ` � '� .� ° o
a � •-
.# % ca p� �c o �
) U
� � � �
OD
' � " •� �'C b
L
� `� �� y >+ � �
s p] c� •- y p o
� ,� � p� '� m ca w
f � y � � Q y �
3 8 J '�" � t� m
i �� °Q `—�' °.�
� Yc� - �
� Ww- C � bpC
' C � d � � � � �
H •
U �u 7 � � 7
� J,� �. o �' W c�
� $
i
; �. w d Q•.°^. �°� o
% � b � y� a� 8
1 U � a �'C �
1 �� y,9 ,� C O U
N � ^ A 7 'b X ,�
fE V
i �,o � w y V �,o
�.
' '' 'C. E � � .� � ��,"
� E O 'd�,.t3 p�C O
I � � � V a. .L. �.�.
j O Q 0 N v Q U Q
-b y
� yO �o� ���
.� .� L O
� � U cAtl U U y O E
� � w .0 cO d iy �
: 'd y ..�+ �"" G � U C
i � c�'j b. y � y� y
3 �
o c �= o
r �b �a� �y�
; °0 d °-3 �' � U o `�-
� '7 d .'�.+ U C O
: � � � '3 E o � �°�n
��� �S ��c xe'
i c. �¢ � c� � � �
� o �U, U�H U ��3
� N O 7 C C� C y 7
o° :b> '��.? '�SoE
.y
�¢ [-y O ``° CQ c�¢ C
F, y � �, � , o
1 C � U y'7 V �' y etl
y' b �'�.�
1�,J C.7 ? d L v7i p�
'° y e 'b '° a ^, y
� � E= Q UdU UwQ
N N N N N
� � � � h
� b�9 4�A 6r�9 6�9
�o 0 0 0
q v'� O �O
_ `° = � ^
0 0 0 0 0
0 0 0 0 0
vi vi vj sv si
h
�
U
�J y
= � a`
N
U
c� O
� -� � v� F: b
3 3 � �� � �
� a � �o � �
a a a a� a a
U U U U cn U U
h
a0
U
m
F
0
W
�
4
U
0 0
o�o o�o
'�7
U
�
e
U �
U �
O � �
W t �
v� � v�
U cC U
00
�/1
C LL1 �
�
c �
w
� y I.�i
Uaa
y U
�z �
x �
�' �° E
U U �
� 0 O b
.�� � �N
�
W b �. �U
b ,ti' .b V �.
7 ,..�
.� �' v � d
O � � � �7
� .� C E ;;
� � � a�i o
.�,k o o 'b
C7 �a
� � � ao r°7.
�y U ..y. C �
�� ��y �•c
� X 'C ci in
��'� '�=
t O C C9
U �
N � � U ld
� � p � �
Up �, � C1
00'�' a N U
� b C � �
G�� ° ���
U
N`�1 O �y c 6�i
a y c �° �
� G •� � G+
.b � � W Uq
� V C N c0
� �
.� E .� � c
3 y,, U U
� C O V �
O C e � .� b
+�+ � � � � ..�.
� w
¢ � '� � � �
t V
- a� �
=a 3 � � o
y C = � � �
J y � � � N
� Ri 'C .� O
� •� C � � 7
��.? y�d
� � = c � ti
C�•°- o �°� y
� �.'�., �t C
o.=Q bOW
o .d i.
� �
x �� 3
U .c �� �" p �
ia v o ai = U�
o.��� .���
•y 6, p 'O U
a
�C L � 0 � V L
F � 'C i� F" oi �
� � � � C
� O 7� O N d
7 .0 ca • c1 �..
� eDw � C0.
U � Ew ��z
�
�
b=0
a
� d
.Y ' 7
� �
�
a ��
Uy y
t6 W
� �
�
Q, O
tV. 69
v w.
�w
� o
y 'rn
, O
� �
� �
w^ ,,?
U �
.� O
FJ �
3 �
G ptV
4V.. r�
� �
� O
o '� �
��
� a, o
� p �
0
� a �
a w �
0
o�n 'ti c
�a
L U y
U C d
� .o A
� � �
a ;, ��p
U E O
n � 'ro
0
.�s U o
N N N N
� h � �
N
O O O O
s� as sn us
c��1
0
0
sv
00
h
�
C
a
d �
xa
� 'v
U U
e e O
0�0 O �
o - o
0 0 0
0 0 0
s9 v� sA
e o 0
V N �
�
� w
� �
ld
� � o �
� , ��
� ¢
� � ��
U U U �1
�
O
O
�--�
.�
Q
N
�
U
�
W
�../
�
�
�5r
bD
Q
�I
�`^
V�Y
�
�
�
V
�I
�
��y
1�1
�
�
�
�
�
O
O
N
*
�
Y
Q�
�
i�r
.�
�
�
%
�
�
�
.yr
�
� b
p � � �
O� C U V ,7
h � O
U O ,7 � nyj
� U N
V�' 'd ,-. C 0 e�d C 'fl i
.b �e o0 ,� t � cC
,� �y U U V ftl a� U Q
¢�� p� � .
.ti�v: c�� . o�Q y �
'�U c�tl rivj A a � �•� � O U
�y� b � U � � a � �
G� � fl y � �-Yi 'b �y � y �
E C C :d +�` � N N� ❑ W
N F.. p � y G' •O '� L� Y�i
° ao � U E o s�'i ' F
C a�i • C `' � �; a a F' c�a ai � ca �
�uy o�•7 a� aQ �� E ��e�
cO �' J7 O' id �'C O,b 'O
A a�7 Q �� W v�V: b '�' ,� wb
y•.., V� � C cy O
p� y 0� �O � d� S O 3� O
� a�D � �.� � W � y C W
� �`" .�� � � a�w � .c°"w
a,� .. °'a�, �U
O U�O ¢�� � 'C w Vy= L n�'j F�
C.7 'O y y a a�. � t� '7 u�. eYV � � c0
� � Q � £ � � C Oi e0 � � y �-+ �
A � •° 9 � T .°'. u? " y � c ° 'o �
� c�i � 4, a�'iX'C� � C.c`�ifS'
'd U 'C
N�� � � `q� � � E.w�. c ° �'� �
°b u �Ow � � 'y� � � � Qw �
� �
� 6.�0. P.` ��" ,� � V a�i�' y��,L
� �� ��U L Us �� � � � �a
J7 � U ��' 'O d O�� b a y'3 .n
�= E ctl �� a � a°'i � ao y ��q Woq
� ;� £ � � �-" C ^� � 'd ,C .y C
ro� V 'b Cn e% U � G w W y � Vi� W
3k'W ��'� .°� �oF�.� v �"
b � b ,b � a
'� '� o h t'a w a • :o ... 5 � � �
0.! . w i� A a o v �
�cT ro � a3i V.5 E c�� a � z��
en�A c) �C � 0.�' a�i G p a� c�i � cyd � b� c�a
� O
ai �,r 3 C a�i td �'� y N U a N� U
p. � °�' °��' :d a � � .� a, :; •ec�n = �v e� �cFn
y G. c o�0 F• c� v� � cy� a� a `� y� a
G £" � p
�Hcd c=� ,�.� Ea"i�a`i y yoa"i
¢ �w ��� � 3 � �°" aa ° ro�a
�ti w'v a� �v o w a� V y'3 e�
� .� `o �°, ° E FG � � z F� .� �a ` �.�
U N '7 �� i6 'C C b C C�'. p p v�
��� v C U CD OO 7 ro O U � V U
V v ❑ �.'C '.+ G' y0 � U >. � � ca >,
'v °' � e°u � ai � 4" � a G 3 � �' ° 3
F~- a � ��m U F� b V�° '�a ,b v �'ro
;° o U o a �� � a��i � PG � o y a
��� ro' z o� p�•[ en � �L e�o
� �„"^, � �� V ' ^ W o o a c�a � c
❑ C� � �' fn 7 T=.s+ .n .� C T•n
o a�.. � �o, � �;v � � — ° � �
U> : ��U H °��' �E�'vdo. Q Hyo.
W N N M N �
f�1
� [� O N N
4N 69 69 6A �. ffi
o � e o
° a � � ¢ �
.- z - -. z -.
O �1 N O O O
l� O
b�9 6�9 b�9 5�9 6�9 b�9
O O O O O
[� ¢ O M V�l �
�--� ,�L N N �--� N
� d
O .d �
d �
� w �
H� kd
�a � �
� ti 0 � W
w t�i 0. 0. � p
�i � V V a" U 'Ci
Cn � '- p' � .F,, C
U W � W W S vi
'b
.�
0
N
0
�
¢
7
O
V
W
.y
W
ca
C
b
7
�
�
b
U
�
>
O M
M
Q Q
'z z
¢ a
z z
Q Q
z z
0 �
�p -.
U
C b C
.� � �
C
is V� [7.7
Y
'b
N
>
ra
0
.�
C
�
m
�
�
.�
�
7
C
z
.Ti
a
�
�
.�
cn
U
'�
U
CO
.�
� •
s �
� a
w �
� U
� a
yar
'9 �
C..) �y
C c"'
. y
� �
N M
o°. �
.I�i �
ctl "�
� �
yg N
Oa
c .�
� �
'b
�
.�
.�.
a
.«
N
�
.I�i
�
c
A
O
.�
O
x
�
¢
�
�
U
�
e�
ro
n.
U
Q
�
d
N
.O
y
� N
U
z�
bb
o �v
� y
H
0
� fJ
'd
� O
� 3
� a
+�' U
'b R
[ O
O
O
�� a
v, y
� o
E: U
A
�r
U y
C �
`� O
.� G.
� �
CS" U
O �
i y
` C
�O
V
� N
U `
�
� y
c N
. �
� `�
A7 a
� o
> 3
N N � N �
O O O O
b�9 6�A %+ 6�9 �
e e � o
0 o a o 0
T [� N l�
-- .- z N N
O O a O O
69 69 �..i 69 b9
�
T
N
>
.a
b
�
� �
•V U
d
UU
O
O
M
>
�
b
�
U
�
.`
E
�
0
U
O O O
� O O
--� N N
U
c �O
� o �e
� U G
U
G + W fn
� � �
.� .� .�
E E E
U U U
�
�
4..
O
i
�
�
L
aVi
�
�.
dD
O
0
0
O
�
n
�
69
C
0
A �
y `
�
V �
Q n
��
� �
U
W C
E �
�a'
�� �
OV' �
� o
w
'b w
� �
o y
b 3
A b
c� �-
�
V Vi
U �
V
b U
��
N in
0
U �
� �
p a
'G d
� C,
rr O
C �y
� N
� o
x
�� �
��
� a
w
U n
O
f�1
Q
z
a
z
S
M
�
�
vl
O�
O
�
�b
U e
0o U
C
y �� C
Y t �
[� � U
°' a a
� V �
�
�
�
� 1
� I
:
�
J
T
�
��..I
F�I
�
@
�
�
� �
^ � � � Z
n 7 'd � �Oe � rn 'O Z �,,,
� � t�tl O b 4 'C � L� � � G. � c~d N ""
C
y �. y �O � � d � � � � ^ p ' � � P � � pp
7 '�G U'y 'A y y C �0 ,.�+ t�l � rfji p ly
a g b p �> y� N O 6 6� N ��p Q .� U � � � GL
�F. � OD E�i L � > � Pr
�. � � � y �' v� �� '� � y � � w � N
. W �y . FI , a�,i � � ^ v .,�i �+ O � � FC a� � � E v
ou A V � >. � 3 �Ey]�, $' � ' � a`i E ' z `^ � d `�, � 3 � °��`�''y,� E
N a.� � � � � �' � ^ ^ � � �' � y LTO O � 4A � � W fry � Q Qi H
'" 0. 'C a� £ oo ay
a � .� a 3 0 � � o � � � 8 .� " � � �°, oo �, '°' E � °' A �a v
y C U
�� � � o� ��� o � $ ai �� A y o ¢ � g Ca o � o �� F
� d � � �a Io� u axi � , o� U a� E � a a� � • y no
� a� ,.�i C/i l^ y v� y y M N O ,b � � y U 'y y V N.d Q � C �
U N � � � � ^ �' v°�, o 'C '� b � °.3 y E, � j �� � � •°�• b o � �" o `° �e
V�+ cE . 'p ^y Q � N O td td 11 ctl I7 K Vi �' > N � U U
.°�a"eo:: � v,° '��° �° � �°' �y £� °' `° � " Q �� ° � � i .�
�. o � o � � � 'a � '� � � E d i
� � o $ � � ,� � � � csa o p t F., a .� o $ � �+ �a on � '� V � ,� F" �°" � �
� i� � o � c�i � � � aci �, ,e aci •y o � ,:, � � � � y � � y� .. � A °a, `^ - � $ a„ �
w ia « �� .� V F� � � c E :- aci � � � � N � �C a�'i PG '^ °: .c�
� H a � � � y v a � �� :? o a �., E�� o� �� E ��y �E d y a�
� SP4 � �_°^ ^ � � � � o �y y � � �� � � � �,� ^ ��� �= � �c, � � �o
;� y o � y � a '� v' � a o o n� �a� •a d � a� d >,
v��i � �i a � T o s � ¢ � a o � •L � d � �� °�' 's � �o °' � y �o :i � ��°, !? .° ,a
�, E `3 � �e Q s �o i' � � 3 3 c � � � � � �a �o ❑ �i ° � U a a
o00.5 � �o � v° '� °' d d� u d v� ja., o a � m ai E o a E d �
� � . t y � � y � E a �� �p,..�. ^ � �cy Q 'o �ao � p, �'�� 5 � �a �b �
W'O L N 7 U� � b N � 0. N �d a�'i O O.^ aF�i r�, y V O��i. Q � '? 'C 7 O 7 'NU
� � ❑ �C d ^ �i 00 � oo -O 'E E � rn � a a � �o � ... � 'z c a� ,3• so �i .� Q' 8
d 'O � Vl � N T m 0. � O N y y' y d �y '� N
C �n o .. �n F 3 `' o a�
C'C � � � N � td V y ctl U F" '� 7 "" � ° YS �� R V7 7 W N 'O ~ � d � Q� td � 0 p
i° c�d '? A � � .3 •�a a E V '� � �o a�i d a � = Q .o E v y o � � c � .m, '� � '^
.c � > > a � ; � � .? � o �b �0 " � a" .�'^. � U �° v �° � `� '� ` c °°' E $, �' '^ �O " � '� °•
� o� w =� o�. E s p„ rn E � � y y .d m y ca L`� w w° o E ° u, .o`^ ��� .. c,
��� �� A� d°-�O a� ai T� m�� E o� �U °= � �°� y°' o�..� ¢� `�°� ?: G�' c, o
��� E 7,Ea y'u.�,� E � � �� �'.v' `n� cE s � �� �d a°i� $'c ,=.�a �,� �o� '� �v�
V O u" '� O r�i. ro U O N � V ��C � C O 7 � � � : Y. �>. c� � O� � c6
o d;; o d.� v o g eo � .a �.'._k u g�H .E c � s G� •C �°' `d $ vv � � `'" '�
a w' a
Co �� v°'i � d �a G o� y��' � `� �- 3 d m w°^ Q U `� s E Y ° G � Z a� � E 3`ry'' °' �o a
�c �d V o0'O '� a1 vi N p. a 'O 'O
� � �E � � � F. � U O � W � � O �' C1 � A 7 � � � � -'; � � c� O � � .y � .E t„^., � � � ',
� d���o+ c �a � a? � � o � �° � o � E ^F. � y � �, � a .G y � `��E � o N�, �� � � �
W 6i V+ v, d etl � y � � �... if o0 � F 'O y U� ..� G. U � a�. U.� N d N C�' 'Z', R
N Vl C d Ir N � ^ � N 0 v M F ... N� A y Q+ � U L� a�.� �'� � �
r, �:::� � ,oa �3a^. � a�o� .o� y� o �.. 0 E �y dy dN ��
C � v� � '� � s � � � � `S� d � d g. °� � o �aCi ° �� � o � d �, £ � •� v? C� � � °' � o �
� p y C/� �' N y Vi •�' � �..i � � F � � y y� �.� �/ Q� p
:+ O � m a� ."n E � � p, P. y C O Ci f�. � C, W `�, `� w U � a� �� � F � , t
�c7 ^ _ o ❑ �... � � � �o >, ° Y � o��, � i Av `" �� v�� v � o = > °' c
u � �i �o ' E 4 �n � $ a � a� [- o � `� � `� '� � .. �o �e 'o � v r; �.. �e � � �
� ��C � � a�i U y yF � m U �C w Q y [�. `,p! V � F"; . t0 ri� ��p.G a��i v 4•G �,�. c'ti � v� � i
• N Q V] � y t0 '�J ^ O 7 • � N ` F C Q� � c� N > y t^ �:ri G N `
0 0 0° b 8 c c�c7 �� w E a � a �� s a�i sr �� s d �.� �, ° �°�, a��i �� y� E �
Q� EU � o d� �;•= ao.� `� .o � � y � o �.= ,�, 3 � � �� a' o�i a.F' �'� °� ' o� a, i
`� v; a 'C o''�' � a� � p" a"i a"i .c a> aai a� 7 d y d d a� '�, a v� �c � � vJ . m m x R' ce
0 0 °:�'e � �b � � � � '$ r,d°-,� � % � � " '� S �' � w w w Y E �w �� E F'" � � ° � o c a
a+ 3 a U P+ r� '� W a� •C '� a W W V W� W d � p � �3 �S 3 � p u d p c�' fi �� a� u. d R', ,
m c == c° ia .o ,s°, ^ � `�L" ao � a� � � '� � � � � F G (-� F,' C 's �� c � �o y '� '� °' � �a A � e°'o
c ��p � �� o•.+c� a `� � � pW a cg o 0 0°' � ov �-c+' �� ❑°:�' ��
� F, w� � u U d'. - �.� Q � d o c a °c a�.i G� G' b c c G a �y � m a�'i q �°�' �� � d V v°�, p '
[- c=o � � c7°�eu o �� � c�a.a �arl `°L `°�.= � m m° S '�o a'�i �� V � �E� o�,a°°i .
� m a Q � G d `� ° � .°�e' � .0 3 .o .v � � a°�i � a��i b c $ � � `� .°_ °w' �° � '� �F '° v' 7 � U = � ° a �
y�,! p� p� �'� Z' 3 � `° $ U U� o U� U� U U U u •°'. c�y 'C �i g ri s° o °°' m E F
� �"x � '" � � � �`n � � � �$ .° b �V-° ❑ �o � �_v ,�,.°ca �^° �o �_o � b i.� � ° k'o � o o �D� ` c
W+ � � v�i M �
� r��a �a �¢ c�z �A c� � 3� 3 3a 3� 3� 3c� � 3 3 3H ��F ¢� w� 3� x ex ¢�
N Y
Oi •Q �
Q y d N
K Q V�
� �
� y
� E �
� 6' i.�i 6�9
�
�
= p. " o
U " `O•
d � �
W �
� E d
�° a. � z
�
i=
L y�
d y �n ¢
� ; � z
w
V
y
�
d
a
� d
� U
� F
..
bo
o A
6�. V�i
N �y M
� � �
N
� �
�
0
0
$ � o0
0 0 0
¢ ¢ d
'z 'z 'z
� d Q
z z z
�
Q �
w
¢ ^ Y
�
U � �
C
N d �Oq
� b �
p°', a w
N N N M N �
N
� d ¢ ¢ ¢ ¢ ¢
� z z z z z z
� ¢ ¢ ¢ a a ¢
� z 'z z z z 'z
o ° ° ° Q °-
z ° ° ° z '
°v,
O 0 � � � �
¢ ri �n vi v'
� O v?
z `� � ° N —
N N
� � V
� � � �
� �"' W "r N ..V.
T �� C �
`g � � � � y
� a � � � V �
7 'O 'O 'O 'O '� r, 'C
y o o a 3 0� o
a 3 3 3 3� 3
� N N N N � N ry N
M
� � � ¢ � �
Q Q Q
z z z � ° ° z ° °
e °
e e Q °y� �p
a ¢ ¢ o � � z
O �'?
z z z � � � �
d o 0
0 0 0 � ° °
0 0 0 � °� °�, 'z s°� °�"
ss as ds
e e o 0 o e
O O O
� � � � � � � �--� �
N � �, .-. �
N
�
�
e
b
0
s°e
M
�
�
N
� v � � �
Y a� �'y' � y ,�.
y O p" � �
� �
e� U
V
W L H
� � � � � � C �
~ c ^ adi s° d� a�i
v �
3 3 3 ��e � v 3 H v�°'i w
�
�
�
0
N
s.
Q
�
.�
W
y
.�e �
�^^
�'�Y
�
�
a
�y^
M4
A
�
�
i�
�1
�
"�
ir
C!�
�
�
�
C�
�
Y I
0
O
N
b
�
w-
:: �
� "�Q' U
� � N
� � t
�� � g y
. � N
ra��, C W O
W � �.n y
�
�. �' _ �
U �
TiE� v�
N 8 a F '3
o�� E�
$ � `�q i � `' a
�C ¢ � �. O � �
a
s° .° � � � � .^°'.
A � "'� � f.di
¢ bz� '�, �
o z,, d Yj" E
vi z 3::E �y S'
C U VO y N v. E•�
69 N �y �+ � ed � •`
eo o ?c3 X
� � � � '� H � �
� ¢ a �x .
8 ^� a�'n �'o ^� c �3 0
.� � a �a TC �
� 0. � �
0.! �. '� •., �
M � � � w o � A
m
� � N �C: $ b �
'� G L: w �= � — �
� ,o � d � .� � �
� � vE� r�g'
C
y �C�i � .� N y^ �
� ,c a�i � °' � U
a Ix u' � w � �a
o" ¢ � U �' � a �
.°', �o S ,, d $, � fi
ro a, ��c � � o
� iy � 'O .� .0 ,O U
�p v O 'a p 'C C�t� �
'� a� C �" "a 'O O N
� °' �° �, E � 's E
0
�' s � � � �Q y
� R �� �,d o
.� � F � `�p '^ `° �
3 0` ���i Q V a
�p � oo ° cL� m a`'i °
w� Vl .� yr' b � �'
�.� UwQ U � y
�o � °'pq a�j �
.`�'. G 'O L `� '� �
R° � � a � `"�' `�°
u � p � U � v�
Q � �
� F a v a U� d
N �
M M M (y
^ N Q' Q Q
° ° z 'z z
h o a ¢ a
° � z z z
o � � o 0
� ° ° � o
�
e � e e e
� � � � �
� �,
^ N tV ... ,,.,
.i w
€ � �
�' �o
° `o
� � 3
�
O
�
�
z
9
O
A
'O
.'^..
>
"' w
� �
u
� �
•"+ �
m ;;
� �
�o, o
� U
N �
V1 F
c �
V U
� �o
.` ,`
w w
� �
C C
b
� y
U U
V1 V�
¢ Q
z z
�
a U '�
� U
� o o a�
C u "�"' N O
� � � � x
��e y S � �
+�- � N Tj .�
� � � � �
� y � � �i
o � y' �� � y
N � ~ � � �
�' a�
o �a ;� a
£ U o � a��i
a adi y° � V o
° w ?: c �? �
A � � b � �
y d � ,� � x �
ro � .o a� y a w
1'.a' VJ �'n � 0
'O ,�' U C � .�Y
�, � � � �s �
�
U w°• � � .o °' w
� � � � � � Y
k,�' a � � �p� �°
'C '� a U O O Op,
� N � � U V L'
'c1 0 � � � U
`d °� � 0 8 � �i
U �
y � � � � � �
s � h � �v �v o
tV. .etlC C �„y � p C
<tl y
p=. y � � a = O
� .. F ^� o A
N O g� �2 � � y ai
� 4 w i! ;? x N
'y R � 'C `�" �' � O v.
QF � � =s Q ry
';a o
v '' �`'° o ¢w
'O b0 'V L' U N U 'fl
Ry �a y� ��
y� y ro a°n � U en
� b a� U � a� � � ��
w u., - � � .S w o
�
o � `o o .� � N ;3 .. a
00 y Oq � O� p r.�. � �
. C C G� " ,� y rn � ctl
,� �^ „G 1.�. Q t=C ¢ � F �
� L 7
0=. U P�. a�i � u � w �' y
�a� d o�
� � 0.' U � Cj ;D '1' E'
c?
� x � � a°�i � y '=� � o
0 0o wa w°' oa
a c°a o� p� p a° o�
y� U� c F �� U F
� N � w c� � `� a`3 � p�p
•� C� .5 � .a y „a � � C
U
7 � � '17 � 7 V � vJ
"� � � �tl A" Pr � d (� %1+
� U � F, '� 'O 'V E' TJ .�
� � o' � � � c � �
::o �E ��, y4 � °
� � yg � �
� U �� �0.� �F: �'c�
� N � M
M
�
.o�°'
°° � � �
b � A
� � � � �
� �-
p,� � F .�
y y N y 'O
Q ���i ¢
zi °� � i �
� 'O FC 4 7
m
V c? �? � a�
�
a°�i �o y � o �
� F'
� >�= b�y `o
O ',�,i y� y y L
C � R�i U a) e�t
'"�f ; 5 en °' o
A 0 G a r�n %.
� xa� �
a, � �; � �� �
=% U � �D `o
� � �
O ` _ .�' �
7
O "' y a' 'p ¢
U w � � � u
^ ,� `� � U Z
°� F' _ ;? Ei
= y°�� �
.� L a �.�+ 4'' t
CG � °� �� O 4°-'
�' � pq d
'L C � V� O �
� � z ti � .'
,Q? �'" � U O
N �'
� a�i � y o°. �
��� � .�
� '55y$ � 5
� N Gi � .�+ Q
a� y` �'o �y `� ,d
� �QF �' �
o� � n`i y U
. �
� � a � � �
F ` i `� a�i `o
� � � 0. V G W
CO E V O L 7� C
N
y � N � � 6� �
�a aE� ma� u
w i � , .� y �
a
R F' � � o � �
}a odo i � � o `°
c �U � o-�
°' d a � �
� 0. f � �' � = U
� yU °
- o � 'p E" � y
w�+ � 7 C � C
p^ OD.E
r�'i � � '� N q �
N m
r`d. U`�d F-1 0" Q' �
,�o " � E ,� c V`'j ;:
Vi ��.�ya £.'r � � 'O
-Ki W ii hY � Q �li /r
W �
N N � .� O
M
C1 ¢
¢ Q ¢ ¢ ¢ ¢ ¢
z z z z z z'z
¢ °
d ¢ Q a ¢
z° 'z z z z z z z
¢ ° o
z Q d d ° °
° � 'z z z � z o
�
o e
'� � � � _ _ = o 0
,M�' nj � O+ r � � �.hj O
� ^, N N
N N
y U
� C � �
� y ,� � U
Q
O � = V F
� V � W v�i � �
� � o` c c o a
� • o 0 0 �„
a• a `
' � �vE E U°°q
� �
c� ,= �: U � .� � a o
U '�-'
W ,_N,
O �
w �
y A
p.`tl. Q;?
O O
�tq �
Cr R�. ... `-'
Q A W �
� y � �
o � ' �
U U U U
�
0
0
E
O
7
U
�
�
c
_
�
.�
e
.�
0
�
�
�
O
L
Q
�
'o
W
`
o°
�
m
�
m
�
u,
O
F
.c
w.
7
a
�o
�
�
�
h
U
�
x
A
�
a�'
�
0
U
�
O
7
U
C
�
�
0
� �
N
� O
G y
� ¢
0
U �
y
� �
� O
U
u � �
N �
O ,� •�
-.C.. y 1y�' W
7 M � N
< d �
y
�� � a
� � � ^
o '
U a� V 'O
• �0 e'o . � U
�_ �
o � w y
w
� F �y P'
_ ` C O
a�i y � q
� � .
" �a � .0
'o � � �
U� � '
� � U �
� L
`o � `' �'
O p
� F = U
.� � .� �
U N U Q
G. ed a a
a �
� � � �
a.�+ y y y
� � � �
� O
�y M O
a Q
z z z z z z
¢ ¢ ¢ ¢ Q �,
z z z z z z
o a o
¢ � � ¢
° � z o z z
�
� o ; _ = o
^ h r � �
N tV '� O
N ry
Q � .�. � N
.�.
C � V � �
" �y q O F O p
m 'O ° ot o o°'n �' �'
�j � F V U� U U
v� ° �e — � �
d ,a�, = o� c en G o� �
m4 A :. �• � °.° o.� o
C' � i '4 E �' E � � '� �
O p � p :; R :: �.�• ,,�, �,V,
V U � �C� °r� �� .�
�
O
�
U
�
N
M
N
N