Bank of America 2009 Annual Report Download - page 79

Table 27 presents our commercial loans and leases, and related
credit quality information at December 31, 2009 and 2008. Loans that
were acquired from Merrill Lynch that were considered impaired were writ-
ten down to fair value upon acquisition. In addition to being included in
the “Outstandings” column below, these loans are also shown sepa-
rately, net of purchase accounting adjustments, for increased trans-
parency, in the “Merrill Lynch Purchased Impaired Loan Portfolio” column.
Nonperforming loans and accruing balances 90 days or more past due do
not include Merrill Lynch purchased impaired loans even though the cus-
tomer may be contractually past due. The portion of the Merrill Lynch port-
folio that was not impaired at acquisition was recorded at fair value in
accordance with fair value accounting. This adjustment to fair value
incorporates the interest rate, creditworthiness of the borrower and mar-
ket liquidity compared to the contractual terms of the non-impaired loans
at the date of acquisition. For more information, see Note 2 – Merger and
Restructuring Activity and Note 6 – Outstanding Loans and Leases to the
Consolidated Financial Statements. The acquisition of Countrywide and
related purchased impaired loan portfolio did not impact the commercial
portfolios.
Table 27 Commercial Loans and Leases
December 31
Outstandings Nonperforming
(1)
Accruing Past Due
90 Days or More
(2)
Merrill Lynch
Purchased
Impaired Loan
Portfolio
(Dollars in millions) 2009 2008 2009 2008 2009 2008 2009
Commercial loans and leases
Commercial – domestic
(3)
$ 181,377 $ 200,088 $ 4,925 $ 2,040 $ 213 $ 381 $100
Commercial real estate
(4)
69,447 64,701 7,286 3,906 80 52 305
Commercial lease financing 22,199 22,400 115 56 32 23 –
Commercial – foreign 27,079 31,020 177 290 67 7361
300,102 318,209 12,503 6,292 392 463 766
Small business commercial – domestic
(5)
17,526 19,145 200 205 624 640 –
Total commercial loans excluding loans
measured at fair value 317,628 337,354 12,703 6,497 1,016 1,103 766
Total measured at fair value
(6)
4,936 5,413 15 –87 ––
Total commercial loans and leases $ 322,564 $ 342,767 $ 12,718 $ 6,497 $1,103 $1,103 $766
(1) Nonperforming commercial loans and leases as a percentage of outstanding commercial loans and leases excluding loans measured at fair value were 4.00 percent (4.01 percent excluding the purchased impaired
loan portfolio) and 1.93 percent at December 31, 2009 and 2008.
(2) Accruing commercial loans and leases past due 90 days or more as a percentage of outstanding commercial loans and leases excluding loans measured at fair value were 0.32 percent and 0.33 percent at
December 31, 2009 and 2008. The December 31, 2009 ratio remained unchanged excluding the purchased impaired loan portfolio.
(3) Excludes small business commercial – domestic loans.
(4) Includes domestic commercial real estate loans of $66.5 billion and $63.7 billion, and foreign commercial real estate loans of $3.0 billion and $979 million at December 31, 2009 and 2008.
(5) Small business commercial – domestic including card related products.
(6) Certain commercial loans are accounted for under the fair value option and include commercial – domestic loans of $3.0 billion and $3.5 billion, commercial – foreign loans of $1.9 billion and $1.7 billion and
commercial real estate loans of $90 million and $203 million at December 31, 2009 and 2008. See Note 20 – Fair Value Measurements to the Consolidated Financial Statements for additional discussion of fair value
for certain financial instruments.
Table 28 presents net charge-offs and related ratios for our commer-
cial loans and leases for 2009 and 2008. The reported net charge-off
ratios for commercial – domestic, commercial real estate and commercial
– foreign were impacted by the addition of the Merrill Lynch purchased
impaired loan portfolio as the initial fair value adjustments recorded on
those loans upon acquisition would have already included the estimated
credit losses.
Table 28 Commercial Net Charge-offs and Related Ratios
Net Charge-offs Net Charge-off Ratios
(1, 2, 3)
(Dollars in millions) 2009 2008 2009 2008
Commercial loans and leases
Commercial – domestic
(4)
$2,190 $ 519 1.09% 0.26%
Commercial real estate 2,702 887 3.69 1.41
Commercial lease financing 195 60 0.89 0.27
Commercial – foreign 537 173 1.76 0.55
5,624 1,639 1.72 0.52
Small business commercial – domestic 2,886 1,930 15.68 9.80
Total commercial $8,510 $3,569 2.47 1.07
(1) Net charge-off ratios are calculated as net charge-offs divided by average outstanding loans and leases excluding loans accounted for under the fair value option.
(2) Net charge-off ratios excluding the Merrill Lynch purchased impaired loan portfolio were 1.06 percent for commercial – domestic, 3.60 percent for commercial real estate, 1.49 percent for commercial – foreign, and
2.41 percent for the total commercial portfolio in 2009. These are the only product classifications impacted by the Merrill Lynch purchased impaired loan portfolio in 2009.
(3) Although the Merrill Lynch purchased impaired portfolio was recorded at fair value at acquisition on January 1, 2009, actual credit losses have exceeded the initial purchase accounting estimates. Included above are
net charge-offs related to the Merrill Lynch purchased impaired portfolio in 2009 of $55 million for commercial – domestic, $88 million for commercial real estate and $90 million for commercial – foreign.
(4) Excludes small business commercial – domestic.
Bank of America 2009 77