2005 Summary Annual Report: Form 10-K: Business Segment Operations

The strategy of Global Consumer and Small Business Banking is to attract, retain and deepen customer relationships. We achieve this strategy through our ability to offer a wide range of products and services through a franchise that stretches coast to coast through 29 states and the District of Columbia. We serve more than 38 million consumer and small business relationships utilizing our network of 5,873 banking centers, 16,785 domestic branded ATMs, and telephone and Internet channels. Within Global Consumer and Small Business Banking, our most significant product groups are Card Services, Consumer Real Estate and Consumer Deposit and Debit Products.

(Dollars in millions)		2005				2004
Net interest income (FTE basis)		$	17,053			$	15,911
Noninterest income:
Service charges			4,996				4,329
Mortgage banking income			1,012				589
Card income(1)			5,476				4,359
All other income			339				(32)
Total noninterest income			11,823				9,245
Total revenue (FTE basis)			28,876				25,156
Provision for credit losses			4,271				3,333
Gains (losses) on sales of debt securities			(2)				117
Noninterest expense			13,440				12,555
Income before income taxes			11,163				9,385
Income tax expense			4,007				3,414
Net income		$	7,156			$	5,971
Shareholder value added		$	4,013			$	3,325
Net interest yield (FTE basis)			5.63%				5.46%
Return on average equity			21.31				21.28
Efficiency ratio (FTE basis)			46.54				49.91
Average:
Total loans and leases		$	144,019			$	122,148
Total assets			330,342				316,204
Total deposits			306,038				283,481
Common equity/Allocated equity			33,589				28,057
Year end:
Total loans and leases			151,646				139,507
Total assets			335,551				336,902
Total deposits			306,083				299,062

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Footnote (1)

Includes Credit Card Income of $3,847 million and $3,127 million for 2005 and 2004, and Debit Card Income of $1,629 million and $1,232 million for 2005 and 2004.

In 2005, Net Interest Income increased $1.1 billion, or seven percent. Growth in deposits, a low cost source of funding, positively impacted Net Interest Income. Average Deposits increased $22.6 billion, or eight percent, driven by the impact of FleetBoston customers, deepening existing relationships and our focus on attracting new customers. Partially offsetting this growth was the migration of account balances of $28.1 billion from Global Consumer and Small Business Banking to Global Wealth and Investment Management. Net Interest Income was also positively impacted by the $21.9 billion, or 18 percent, increase in Average Loans and Leases. This increase was driven by higher average balances on home equity loans and lines of credit and average held credit card outstandings. The growth in held credit card outstandings was due to the impact of FleetBoston, increases in purchase volumes, the addition of more than 5 million new accounts primarily through our branch network and direct marketing programs, and new advances on accounts for which previous loan balances were sold to the securitization trusts.

Noninterest Income increased $2.6 billion, or 28 percent, in 2005. The increase was primarily due to increases of $1.1 billion, or 26 percent, in Card Income, $667 million, or 15 percent, in Service Charges and $423 million in Mortgage Banking Income. Card Income increased mainly due to higher purchase volumes for credit and debit cards, the impact of the NPC acquisition in the fourth quarter of 2004, and increases in average managed credit card outstandings. The increases in card purchase volumes and average managed credit card outstandings were due to continued growth in our card business as we more effectively leveraged our branch network. The increase in Service Charges was due primarily to the growth in new accounts. Mortgage Banking Income increased primarily due to a $400 million decrease in the impairment of MSRs. Also impacting these increases was the impact of FleetBoston.

The Provision for Credit Losses increased $938 million, or 28 percent, to $4.3 billion in 2005 mainly due to credit card. For further discussion of the increased Provision for Credit Losses related to credit card, see the following section, Card Services.

Noninterest Expense grew $885 million, or seven percent in 2005. The majority of the increase was due to the impact of FleetBoston and NPC.

Card Services

Card Services, which excludes debit cards, provides a broad offering of credit cards to an array of customers including consumers and small businesses. Our products include traditional credit cards, and a variety of co-branded and affinity 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 (a non-GAAP measure). Managed basis treats securitized loan receivables as if they were still on the balance sheet and presents the earnings on the sold loan receivables as if they were not sold. We evaluate credit card operations on a managed basis as the receivables that have been securitized are subject to the same underwriting standards and ongoing monitoring as the held loans. The credit performance of the managed portfolio is important to understanding the results of card operations.

The following table reconciles the credit card portfolio on a held basis to a managed basis to reflect the impact of securitizations. 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. In a securitization, the credit card receivables, not the ongoing relationships, are sold to the trust. After the revolving period of the securitization, assuming no new securitizations, the newly generated credit card receivables arising from these relationships are recorded on our balance sheet. This has the effect of increasing Loans and Leases and increasing Net Interest Income and the Provision for Credit Losses (including net charge-offs), with a reduction in Noninterest Income.

(Dollars in millions)		2005				2004
Income Statement Data
Held net interest income(1)		$	4,984			$	4,283
Securitizations impact			572				799
Managed net interest income			5,556				5,082
Held noninterest income(1)			3,951				3,243
Securitizations impact			(115)				(185)
Managed noninterest income			3,836				3,058
Held total revenue(1)			8,935				7,526
Securitizations impact			457				614
Managed total revenue			9,392				8,140
Held provision for credit losses(1)			3,999				3,112
Securitizations impact			434				524
Managed credit impact			4,433				3,636
Balance Sheet Data
Average held credit card outstandings(1)		$	53,997			$	43,435
Securitizations impact			5,051				6,861
Average managed credit card outstandings		$	59,048			$	50,296
Ending held credit card outstandings(1)		$	58,548			$	51,726
Securitizations impact			2,237				6,903
Ending managed credit card outstandings		$	60,785			$	58,629
Credit Quality Statistics
Held net charge-offs(1)		$	3,652			$	2,305
Securitizations impact			434				524
Managed credit card net losses		$	4,086			$	2,829
Held net charge-offs(1)			6.76%				5.31%
Securitizations impact			0.16				0.31
Managed credit card net losses			6.92%				5.62%

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Footnote (1)

Held basis is a GAAP measure.

Strong credit card growth drove Card Services revenue in 2005. Held credit card revenue increased $1.4 billion, or 19 percent, to $8.9 billion. Contributing to this increase was the $701 million increase in held Net Interest Income, due to a $10.6 billion, or 24 percent, increase in average held credit card outstandings. The increase in average held credit card outstandings was due to the impact of FleetBoston, increases in purchase volumes, the addition of more than 5 million new accounts primarily through our branch network and direct marketing programs, and new advances on accounts for which previous loan balances were sold to the securitization trusts.

Also driving Card Services held revenue was an increase in Noninterest Income of $708 million, or 22 percent, in 2005. The increase resulted from higher merchant discount fees, interchange fees, cash advance fees and late fees. Merchant discount fees increased $418 million primarily due to the acquisition of NPC. Interchange fees increased $87 million mainly due to a $10.4 billion, or 13 percent, increase in consumer credit card purchase volumes. Cash advance fees increased $64 million due to higher balance transfers. Late fees increased $62 million in 2005.

Held Provision for Credit Losses increased $887 million to $4.0 billion in 2005, driven primarily by higher net charge-offs. Consumer card net charge-offs were $3.7 billion, or 6.76 percent in 2005 compared to $2.3 billion, or 5.31 percent in 2004. Higher credit card net charge-offs were driven by an increase in bankruptcy related charge-offs of $578 million as card customers “rushed to file” ahead of the new bankruptcy law. Also impacting net charge-offs were organic portfolio growth and seasoning, increases effective in 2004 in credit card minimum payment requirements, the impact of FleetBoston and new advances on accounts for which previous loan balances were sold to the securitization trusts. We estimate that approximately 70 percent of the increased bankruptcy-related charge-offs represent acceleration from 2006. Excluding bankruptcy-related charge-offs representing acceleration from 2006 and charge-offs associated with the 2004 changes in credit card minimum payment requirements that were provided for in late 2004, the increased net charge-offs were the primary driver of the higher Provision for Credit Losses. In addition, the Provision for Credit Losses was impacted by new advances on accounts for which previous loan balances were sold to the securitization trusts, and the establishment of reserves in 2005 for additional changes made in late 2005 in credit card minimum payment requirements.

Managed card revenue increased $1.3 billion, or 15 percent, to $9.4 billion in 2005, driven by a $474 million, or nine percent, increase in managed Net Interest Income, and a $778 million, or 25 percent increase, in managed Noninterest Income. Average managed credit card outstandings were $59.0 billion in 2005 compared to $50.3 billion in 2004. The impact of FleetBoston and organic growth drove the increases in 2005.

Managed consumer credit card net losses were $4.1 billion, or 6.92 percent of total average managed credit card loans in 2005, compared to $2.8 billion, or 5.62 percent in 2004. Higher managed credit card net losses were driven by an increase in bankruptcy net losses resulting from the change in the bankruptcy law, continued growth and seasoning, increases effective in 2004 in credit card minimum payment requirements and the impact of FleetBoston. For more information, see Credit Risk Management.

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 5,873 banking centers, dedicated sales account executives in over 150 locations and through a dedicated sales force offering our customers direct telephone and online access to our products. Additionally, we serve our customers through a partnership with more than 6,600 mortgage brokers in 49 states. The mortgage product offerings for home purchase and refinancing needs include fixed and adjustable rate loans, and home equity lines of credit. To manage this portfolio, these products are either sold into the secondary mortgage market to investors while retaining Bank of America customer relationships or are held on our balance sheet for ALM purposes.

Consumer Real Estate is managed with a focus on its two primary businesses, first mortgage and home equity. The first mortgage business includes the origination, fulfillment and servicing of first mortgage loan products. Servicing activities primarily include collecting cash for principal, interest and escrow payments from borrowers, and accounting for and remitting principal and interest payments to investors. Servicing income includes ancillary income derived in connection with these activities, such as late fees. The home equity business includes lines of credit and second mortgages. These two businesses provide us with a business model that meets customer real estate borrowing needs in various interest rate cycles.

Total revenue for the Consumer Real Estate business increased $558 million to $3.2 billion in 2005. The following table shows the Global Consumer and Small Business Banking revenue components of the Consumer Real Estate business.

(Dollars in millions)		2005			2004
Net Interest Income
Home equity		$	1,340		$	1,108
Residential first mortgage			806			1,140
Net interest income			2,146			2,248
Mortgage banking income(1)			1,012			589
Trading account profits			—			(349)
Other income			66			178
Total consumer real estate revenue		$	3,224		$	2,666

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Footnote (1)

For more information, see the following Mortgage Banking Income table.

Net Interest Income decreased $102 million primarily driven by the impact of spread compression due to flattening of the yield curve and the $2.3 billion decrease in average residential first mortgage balances. This decrease was partially offset by higher average balances in the home equity portfolio, which grew $11.2 billion, or 31 percent, to $47.7 billion which was attributable to account growth and larger line sizes resulting from enhanced product offerings, the expanding home equity market and the impact of FleetBoston.

In 2005, home equity average balances across all business lines grew $18.8 billion, or 42 percent, to $63.9 billion and home equity production improved $15.3 billion, or 27 percent, to $72.0 billion compared to 2004.

In 2005, there were no Trading Account Profits compared to a loss of $349 million in 2004, related to the Certificates. Effective June 1, 2004, the Certificates were converted to MSRs. Prior to the conversion, changes in the value of the Certificates, MSRs and derivatives used for risk management were recognized as Trading Account Profits. In 2004, Trading Account Profits included $342 million of downward adjustments for changes to valuation assumptions and prepayment adjustments.

Mortgage Banking Income increased $423 million to $1.0 billion in 2005. The following summarizes the components of Mortgage Banking Income which include production income from loans sold in the secondary market and servicing income that reflects the performance of the servicing portfolio.

(Dollars in millions)		2005				2004
Production income(1)		$	674			$	765
Servicing income:
Servicing fees and ancillary income			848				615
Amortization of MSRs			(613)				(345)
Gains on sales of MSRs			14				—
Net MSR and SFAS 133 derivative hedge adjustments(2)			167				18
Losses on derivatives(3)			(15)				(1)
Impairment of MSRs			(63)				(463)
Total net servicing income			338				(176)
Total mortgage banking income(4)		$	1,012			$	589

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Footnote (1)

Includes $(14) million and $2 million related to hedge ineffectiveness of cash flow hedges on our mortgage warehouse for 2005 and 2004.

Footnote (2)

Represents derivative hedge losses of $124 million under SFAS 133, offset by an increase in the value of the MSRs of $291 million for 2005, and derivative hedge gains of $228 million offset by a decrease in the value of the MSRs of $210 million for 2004. For additional information on MSRs, see Note 9 of the Consolidated Financial Statements.

Footnote (3)

Net losses on derivatives used as economic hedges of MSRs not designated as SFAS 133 hedges.

Footnote (4)

Includes revenue for mortgage services provided to other segments that are eliminated in consolidation (in All Other) of $207 million and $175 million for 2005 and 2004.

Production for residential first mortgages, within Global Consumer and Small Business Banking, was $74.7 billion in 2005 compared to $80.2 billion in 2004, a decrease of seven percent. In 2005, production income decreased $91 million to $674 million due to lower production volume and margin compression. The volume reduction resulted in lower loan sales to the secondary market in 2005 of $65.1 billion, an eight percent decrease from 2004.

Across all segments, residential first mortgage production was $86.8 billion in 2005 compared to $87.5 billion in 2004. Of the volume across all segments during 2005, $60.3 billion was originated through retail channels, and $26.5 billion was originated through the wholesale channel. This compares to $57.6 billion and $30.0 billion during 2004. Refinance activity in 2005 was approximately 49 percent of the production compared to 57 percent in 2004.

The Consumer Real Estate servicing portfolio includes originated and retained residential mortgages, loans serviced for others and home equity loans. The servicing portfolio at December 31, 2005 was $368.4 billion, $35.9 billion higher than December 31, 2004, driven primarily by production, home equity account growth and lower prepayment rates.

Net servicing income rose $514 million in 2005, primarily driven by a $400 million decrease in impairment of MSRs. Impairment charges in 2004 included a $261 million adjustment for changes in valuation assumptions and prepayment adjustments to align with changing market conditions and customer behavioral trends.

As of December 31, 2005, the MSR balance was $2.7 billion, an increase of $300 million, or 13 percent, from December 31, 2004. This value represented 122 bps of the related unpaid principal balance, a three percent increase from December 31, 2004. The following table outlines our MSR statistical information:

		December 31
(Dollars in millions)		2005				2004
MSR data:
Balance		$	2,658			$	2,358
Capitalization value			1.22%				1.19%
Unpaid balance(2)		$	218,172			$	197,795
Number of customers (in thousands)			1,619				1,582

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Footnote (1)

Excludes MSRs in Global Capital Markets and Investment Banking at December 31, 2005 and 2004 of $148 million and $123 million.

Footnote (2)

Represents the portion of our servicing portfolio for which a MSR asset has been recorded.

MSRs are accounted for at the lower of cost or market with impairment recognized as a reduction to Mortgage Banking Income. A combination of derivatives and AFS securities (e.g. mortgage-backed securities) is utilized to hedge the changes in value associated with the MSRs. At December 31, 2005, $2.3 billion of MSRs were hedged using a SFAS 133 strategy and $250 million of MSRs were economically hedged using AFS securities. During 2005, Net Interest Income included $18 million on these AFS securities. At December 31, 2005, the unrealized loss on AFS securities used to economically hedge the MSRs was $29 million compared to an unrealized gain of $21 million at December 31, 2004. For more information on MSRs, see Note 1 and Note 9 of the Consolidated Financial Statements.

Consumer Deposit and Debit Products

Consumer Deposit and Debit Products provides a comprehensive range of products to consumers and small businesses. Our products include traditional savings accounts, money market savings accounts, CDs and IRAs, regular and interest-checking accounts, debit cards and a variety of business checking options.

In 2005, we added approximately 2.3 million net new retail checking accounts and 1.9 million net new retail savings accounts. This growth resulted from continued improvement in sales and service results in the Banking Center Channel, the introduction of new products, the addition of 99 new stores and the impact of FleetBoston. In the FleetBoston franchise, we opened 431,000 net new retail checking and 348,000 net new retail savings accounts since the FleetBoston Merger on April 1, 2004.

Consumer deposit products provide a relatively stable and inexpensive source of liquidity. We earn net interest spread revenues from investing this liquidity in earning assets through client facing lending activity and our ALM process. The revenue streams from these activities are allocated to our deposit products using our funds transfer pricing process which takes into account the interest rates and maturity characteristics of the deposits. Deposits also generate account fees while debit cards generate interchange income. The following table shows the components of Total Revenue for Consumer Deposit and Debit Products.

(Dollars in millions)		2005			2004
Net interest income		$	8,380		$	6,982
Deposit service charges			4,986			4,321
Debit card income			1,629			1,232
Total noninterest income			6,615			5,553
Total deposit and debit revenue		$	14,995		$	12,535

Total deposit and debit revenue grew $2.5 billion, or 20 percent, in 2005. Driving this growth was an increase of $1.4 billion, or 20 percent, in Net Interest Income resulting from higher levels of deposits. Also impacting the growth in Net Interest Income was our pricing strategy and the positive impact of the FleetBoston Merger.

Deposit service charges increased $665 million, or 15 percent, in 2005. The increase was primarily due to the growth of new accounts across our franchise and the impact of the FleetBoston Merger.

Debit card income, which is included in Card Income on the Consolidated Statement of Income, increased $397 million, or 32 percent, in 2005. Driving the increase was growth in transaction activity as purchase volumes increased 29 percent due to new accounts, growth in average ticket size and the positive impact of the FleetBoston Merger, as well as higher interchange rates on debit card transactions.

Global Business and Financial Services serves mid-sized domestic and international business clients providing financial services, specialized industry expertise and local delivery through a global team of client managers and a variety of businesses including Global Treasury Services, Middle Market Banking, Business Banking, Commercial Real Estate Banking, Leasing, Business Capital, and Dealer Financial Services. It also includes our businesses in Latin America. During the third quarter of 2005, our operations in Mexico were realigned and are now included in the results of Global Business and Financial Services, rather than Global Capital Markets and Investment Banking. Also during the third quarter of 2005, we announced the future combination of Global Business and Financial Services and Global Capital Markets and Investment Banking that was effective on January 1, 2006. This new segment is called Global Corporate and Investment Banking.

Global Treasury Services provides integrated working capital management and treasury solutions to clients across the U.S. and 50 countries through our network of proprietary offices and clearing arrangements with other financial institutions. Our clients include multinationals, middle-market companies, correspondent banks, commercial real estate firms and governments. Our services include treasury management, trade finance, foreign exchange, short-term credit facilities and short-term investing. The revenues and operating results are reflected in this segment as well as Global Consumer and Small Business Banking and Global Capital Markets and Investment Banking, based upon where customers and clients are serviced.

Middle Market Banking provides commercial lending, treasury management products, investment banking, capital markets, and insurance services to middle-market companies across the U.S.

Business Banking offers our client-managed small business customers a variety of business solutions to grow and manage their businesses. Products and services include a wide range of credit and treasury management solutions, advisory services such as merchant services, card products, payroll and employee benefits.

Commercial Real Estate Banking, with offices in more than 60 cities across the U.S., provides project financing and treasury management solutions to private developers, homebuilders and commercial real estate firms. This business also includes community development banking, which provides lending and investing services to low- and moderate-income communities.

Leasing provides leasing solutions to small businesses, middle-market and large corporations in the U.S. and internationally, offering expertise in the municipal, corporate aircraft, healthcare and vendor markets.

Business Capital provides asset-based lending financing solutions that are customized to meet the capital needs of our clients by leveraging their assets on a primarily secured basis in the U.S., Canada and European markets.

Dealer Financial Services provides indirect and direct lending and investing services, including floor plan programs and consumer financing for marine, recreational vehicle and auto dealerships through more than 10,000 dealer clients across the U.S.

Latin America includes our full-service Latin American operations in Brazil, Chile, Argentina, and Uruguay, and our commercial and wealth and investment management operations in Mexico. These businesses primarily service indigenous and multinational corporations, small businesses and affluent consumers. On October 13, 2005, we announced an agreement to sell our asset management business in Mexico with $1.8 billion of assets under management to an entity in which we have a 24.9 percent investment. The sale will be completed in 2006. In December 2005, we entered into a definitive agreement for the sale of BankBoston Argentina assets and assumption of liabilities. The transaction is subject to obtaining all necessary regulatory approvals. For more information on our Latin American operations, see our discussion on Foreign Portfolio.

(Dollars in millions)		2005				2004
Net interest income (FTE basis)		$	7,788			$	6,534
Noninterest income:
Service charges			1,469				1,287
Investment and brokerage services			221				168
All other income			1,682				1,262
Total noninterest income			3,372				2,717
Total revenue (FTE basis)			11,160				9,251
Provision for credit losses			(49)				(442)
Gains on sales of debt securities			146				—
Noninterest expense			4,162				3,598
Income before income taxes			7,193				6,095
Income tax expense			2,631				2,251
Net income		$	4,562			$	3,844
Shareholder value added		$	1,486			$	1,297
Net interest yield (FTE basis)			4.05%				4.06%
Return on average equity			15.63				15.89
Efficiency ratio (FTE basis)			37.29				38.90
Average:
Total loans and leases		$	180,557			$	151,725
Total assets			222,584				184,771
Total deposits			106,951				93,254
Common equity/Allocated equity			29,182				24,193
Year end:
Total loans and leases			192,532				170,698
Total assets			237,679				214,045
Total deposits			114,241				107,838

Net Interest Income increased $1.3 billion, or 19 percent in 2005. The increase was largely due to growth in commercial loans and leases, deposit balances, and the impact of FleetBoston earning assets offset by spread compression driven by a flattening yield curve. Average outstanding Loans and Leases increased $28.8 billion, or 19 percent, in 2005 due to loan growth in Middle Market Banking, Dealer Financial Services (primarily due to consumer bulk purchases), Commercial Real Estate Banking, Leasing and Business Banking. Average commercial deposits, which are a lower cost source of funding, increased $13.7 billion, or 15 percent, in 2005, driven by deposit growth in Middle Market Banking, Business Banking, Latin America andCommercial Real Estate Banking.

Noninterest Income increased $655 million, or 24 percent, in 2005. The increase was driven by a $420 million increase in other noninterest income to $1.7 billion, primarily due to the FleetBoston Merger and gains on early lease terminations. Higher Service Charges impacted the increase in Noninterest Income, primarily driven by the FleetBoston Merger.

The Provision for Credit Losses increased $393 million to negative $49 million in 2005 compared to negative $442 million in 2004. The negative provision reflects continued improvement in commercial credit quality although at a slower rate than experienced in 2004. An improved risk profile in Latin America and reduced uncertainties resulting from the completion of credit-related integration activities for FleetBoston also contributed to the negative provision. For more information, see Credit Risk Management.

Noninterest Expense increased $564 million, or 16 percent. The increase was primarily due to higher Personnel expense as a result of increased performance based incentive compensation, higher processing costs and the FleetBoston Merger.

Our strategy is to align our resources with sectors where we can deliver value-added financial solutions to our issuer and investor clients. This segment provides a broad range of financial services to large corporate domestic and international clients, financial institutions, and government entities. It also provides significant resources and capabilities to our investor clients providing them with financial solutions as well as allowing greater access to market liquidity and risk management capabilities through various distribution channels. Clients are supported through offices in 27 countries that are divided into three distinct geographic regions: U.S. and Canada; Asia; and Europe, Middle East and Africa. Our products and services include loan originations, mergers and acquisitions advisory, debt and equity underwriting, distribution and trading, cash management, derivatives, foreign exchange, leveraged finance, structured finance and trade services. During the third quarter of 2005, our operations in Mexico were realigned and are now included in the results of Global Business and Financial Services, rather than Global Capital Markets and Investment Banking. Also during the third quarter of 2005, we announced the future combination of Global Business and Financial Services and Global Capital Markets and Investment Banking that was effective on January 1, 2006. This new segment is called Global Corporate and Investment Banking.

During the fourth quarter of 2004, we announced a strategic initiative to invest approximately $675 million in Global Capital Markets and Investment Banking to expand on opportunities in the business’s platform. These investments were primarily focused on expanding our fixed income activities with both the issuer and investor client sectors. As of December 31, 2005, approximately 80 percent of this investment had been invested on personnel, technology and other infrastructure costs, which are all in various phases of execution. We remain committed to the build out of this business and believe that in time we will be well-positioned in the markets where we choose to compete.

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. Global Investment Banking underwrites and makes markets in equity and equity-linked securities, high-grade and high-yield corporate debt securities, commercial 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 international 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 counterparty risk in our large corporate portfolio using risk mitigation techniques including credit default swaps (CDS).

Global Treasury Services provides the technology, strategies and integrated solutions to help financial institutions, government agencies and corporate clients manage their cash flows. For additional information on Global Treasury Services, see Global Business and Financial Services.

(Dollars in millions)		2005				2004
Net interest income (FTE basis):
Core net interest income		$	1,854			$	2,019
Trading-related net interest income			1,444				2,039
Total net interest income			3,298				4,058
Noninterest income:
Service charges			1,146				1,287
Investment and brokerage services			806				705
Investment banking income			1,749				1,783
Trading account profits			1,664				1,023
All other income			346				190
Total noninterest income			5,711				4,988
Total revenue (FTE basis)			9,009				9,046
Provision for credit losses			(244)				(445)
Gains (losses) on sales of debt securities			117				(10)
Noninterest expense			6,678				6,581
Income before income taxes			2,692				2,900
Income tax expense			956				976
Net income		$	1,736			$	1,924
Shareholder value added		$	642			$	873
Net interest yield (FTE basis)			0.92%				1.47%
Return on average equity			16.73				19.34
Efficiency ratio (FTE basis)			74.13				72.76
Average:
Total loans and leases		$	34,353			$	33,891
Trading-related earning assets			299,374				227,230
Total assets			410,979				321,743
Total deposits			84,979				74,738
Common equity/Allocated equity			10,372				9,946
Period end:
Total loans and leases			40,213				33,387
Trading-related earning assets			282,456				189,596
Total assets			395,900				303,897
Total deposits			86,144				76,986

Net Interest Income declined $760 million, or 19 percent, in 2005. Driving the decrease was lower trading-related Net Interest Income of $595 million, or 29 percent. Despite the growth in average trading-related earning assets of $70.9 billion, or 33 percent, the contribution to Net Interest Income decreased due to a flattening yield curve. In 2005, core net interest income decreased $165 million to $1.9 billion primarily due to spread compression. Average Deposits increased $10.2 billion, or 14 percent, due to higher foreign deposits and escrow balances.

Noninterest Income increased $723 million, or 14 percent, in 2005. Driving the increase were higher Trading Account Profits of $641 million, Equity Investment Gains (included in all other income) of $123 million and Investment and Brokerage Services of $101 million. The increase in Trading Account Profits was due to growth in average trading-related earning assets as a result of increased client activity as we continued to invest in the business. These increases were partially offset by declines in Service Charges of $141 million due to effects of rising earnings credits on balances required for services and lower Investment Banking Income of $34 million.

Provision for Credit Losses increased $201 million to negative $244 million in 2005, compared to negative $445 million in 2004, driven by a slower rate of improvement in commercial credit quality. Net charge-offs declined $245 million from the prior year, driven partially by increased recoveries. For more information, see Credit Risk Management.

Noninterest Expense remained relatively unchanged in 2005. Other general operating expense decreased primarily due to the segment’s share of the mutual fund settlement and other litigation reserves recorded in 2004. This decrease was offset by higher Personnel expense, including costs associated with the strategic initiative.

Trading-related revenue and equity commissions, both key measures reviewed by management, are presented in the following table.

(Dollars in millions)		2005			2004
Trading-related net interest income(1)		$	1,444		$	2,039
Trading account profits(2)			1,664			1,023
Total trading-related revenue(2)			3,108			3,062
Equity commissions (1) (3)			794			667
Total trading-related revenue and equity commissions		$	3,902		$	3,729
Trading-related Revenue by Product and Equity Commissions
Fixed income		$	1,054		$	1,547
Interest rate(1)			767			667
Foreign exchange			744			752
Equities and equity commissions(1)			1,201			862
Commodities			87			45
Market-based trading-related revenue and equity commissions			3,853			3,873
Credit portfolio hedges(4)			49			(144)
Total trading-related revenue and equity commissions(2)		$	3,902		$	3,729

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Footnote (1)

FTE basis

Footnote (2)

Total corporate Trading Account Profits were $1,812 million and $869 million in 2005 and 2004. Total corporate trading-related revenue was $3,256 million and $2,908 million in 2005 and 2004.

Footnote (3)

Equity commissions are included in Investment and Brokerage Services in the Consolidated Statement of Income.

Footnote (4)

Includes CDS and related products used for credit risk management. For additional information on CDS, see Concentrations of Commercial Credit Risk.

In 2005, market-based trading-related revenue was $3.9 billion, relatively unchanged from the prior year. Fixed income revenue decreased $493 million due to increased spread volatility in certain industries and lack of investor demand. Offsetting this decline were increases in equities and equity commissions, interest rate-related revenues and commodities. Trading-related revenue from equities and equity commissions increased $339 million due to higher customer activity and the absence of net losses on a stock position that occurred in 2004. Interest rate-related revenues increased $100 million primarily related to higher sales activity. In 2005, commodities revenue increased $42 million as the prior year included losses related to positions in gas and jet fuel.

Total trading-related revenue and equity commissions included net gains of $49 million associated with credit portfolio hedges, an improvement of $193 million from 2004. The improvement was primarily due to widening of spreads on CDS in certain industries.

The following table presents the detail of Investment Banking Income within the segment.

(Dollars in millions)		2005			2004
Securities underwriting		$	787		$	920
Syndications			528			521
Advisory services			409			310
Other			25			32
Total investment banking income(1)		$	1,749		$	1,783

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Footnote (1)

Investment Banking Income recorded in other business units in 2005 and 2004 was $107 million and $103 million.

Investment Banking Income decreased $34 million, or two percent, in 2005. The decrease was due primarily to a decline in securities underwriting as the overall market contracted and private placement activity declined. This decline was partially offset by market share gains in certain debt issuance markets and higher advisory services income due to increased merger and advisory activity.

This segment provides tailored investment services to individual and institutional clients in various stages and economic cycles. Our clients are offered specific products and services based on their needs through five major businesses: Premier Banking and Investments (PB&I), The Private Bank, Family Wealth Advisors (FWA), Columbia Management Group (Columbia) and Other Services.

PB&I includes Banc of America Investments (BAI), our full-service retail brokerage business and our Premier Banking channel. PB&I brings personalized banking and investment expertise through priority service with client-dedicated teams. PB&I provides a high-touch client experience through a network of more than 2,100 client managers to our affluent customers with 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. BAI is the third largest bank-owned brokerage company in the U.S. with $151 billion in client assets. BAI serves approximately 1.6 million accounts through a network of approximately 1,895 financial advisors throughout the U.S.

The Private Bank provides integrated wealth management solutions to high-net-worth individuals, middle market institutions and charitable organizations with investable assets greater than $3 million. Services include investment, trust, banking and lending services as well as specialty asset management services (oil and gas, real estate, farm and ranch, timberland, private businesses and tax advisory).

FWA at the Private Bank is designed to serve the needs of ultra high-net-worth individuals and families. This new business provides a higher level of contact and tailored service and wealth management solutions that address the complex needs of clients with investable assets greater than $50 million. FWA was rolled out during the first quarter of 2005.

Columbia is an asset management organization primarily serving the needs of institutional customers. Columbia provides asset management services, liquidity strategies and separate accounts. Columbia 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 (taxable and nontaxable). In addition to servicing institutional clients, Columbia distributes its products and services to individuals through The Private Bank, PB&I, FWA 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 of America Specialist, a New York Stock Exchange market-maker.

(Dollars in millions)		2005				2004
Net interest income (FTE basis)		$	3,770			$	2,869
Noninterest income:
Investment and brokerage services			3,122				2,728
All other income			501				336
Total noninterest income			3,623				3,064
Total revenue (FTE basis)			7,393				5,933
Provision for credit losses			(5)				(20)
Noninterest expense			3,672				3,431
Income before income taxes			3,726				2,522
Income tax expense			1,338				917
Net income		$	2,388			$	1,605
Shareholder value added		$	1,337			$	754
Net interest yield (FTE basis)			3.21%				3.36%
Return on average equity			23.34				19.35
Efficiency ratio (FTE basis)			49.66				57.83
Average:
Total loans and leases		$	54,021			$	44,057
Total assets			125,289				91,889
Total deposits			115,301				83,053
Common equity/Allocated equity			10,232				8,296
Year end:
Total loans and leases			58,277				49,783
Total assets			127,156				122,587
Total deposits			113,389				111,107

Net Interest Income increased $901 million, or 31 percent, in 2005. This increase was due to growth in deposits and loans in PB&I and The Private Bank. Average Deposits increased $32.2 billion, or 39 percent, in 2005 primarily due to the migration of $28.1 billion of account balances from Global Consumer and Small Business Banking to PB&I, and organic growth in PB&I and The Private Bank. Average Loans and Leases increased $10.0 billion, or 23 percent, due to higher loan volume in PB&I and The Private Bank. The secondary driver of the increase in Average Deposits, and Loans and Leases was the impact of the FleetBoston portfolio.

Noninterest Income increased $559 million, or 18 percent, in 2005. Noninterest Income consists primarily of Investment and Brokerage Services, which represents fees earned on client assets and brokerage commissions. The Investment and Brokerage Services revenue increase in 2005, compared to 2004, was mainly due to the impact of FleetBoston.

		December 31
(Dollars in billions)		2005			2004
Assets under management		$	482.4		$	451.5
Client brokerage assets			161.7			149.9
Assets in custody			94.2			107.0
Total client assets		$	738.3		$	708.4

Total client assets increased $29.9 billion, or four percent, in 2005. This increase was due to the $30.9 billion increase in assets under management in 2005, which was driven by net inflows primarily in short-term money market assets and an increase in overall market valuations. 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 taxable and nontaxable money market products, equities, and taxable and nontaxable fixed income securities.

Noninterest Expense increased $241 million, or seven percent, in 2005. The increase was due primarily to increased Personnel expenses driven by PB&I growth in the Northeast and the impact of FleetBoston. This increase was partially offset by lower other general operating expenses due to the segment’s share of the mutual fund settlement recorded in 2004.

Included in All Other are our Equity Investments businesses, and Other.

Equity Investments include Principal Investing and corporate investments. Principal Investing is comprised of a diversified portfolio of investments in privately-held and publicly-traded companies at all stages of their life cycle from start-up to buyout. Corporate investments include CCB, Grupo Financiero Santander Serfin and various other investments.

Other includes the residual impact of the allowance for credit losses process, Merger and Restructuring Charges, intersegment eliminations, and the results of certain consumer finance and commercial lending businesses that are being liquidated. Other also includes certain amounts associated with the ALM process, including the impact of funds transfer pricing allocation methodologies, amounts associated with the change in the value of derivatives used as economic hedges of interest rate and foreign exchange rate fluctuations that do not qualify for SFAS 133 hedge accounting treatment, gains or losses on sales of whole mortgage loans, and Gains on Sales of Debt Securities. The objective of the funds transfer pricing allocation methodology is to neutralize the business segments from changes in interest rate and foreign exchange fluctuations. Accordingly, for segment reporting purposes, the business segments receive the neutralizing benefit to Net Interest Income related to the economic hedges previously mentioned, with the offset recorded in Other.

(Dollars in millions)		2005				2004 (Restated)
Net interest income (FTE basis)(1)		$	(340)			$	(695)
Noninterest income:
Equity investment gains			1,646				750
All other income(1)			(821)				241
Total noninterest income			825				991
Total revenue (FTE basis)			485				296
Provision for credit losses			41				343
Gains on sales of debt securities(1)			823				1,617
Merger and restructuring charges			412				618
All other noninterest expense			317				229
Income before income taxes			538				723
Income tax expense (benefit)			(85)				120
Net income		$	623			$	603
Shareholder value added		$	(884)			$	(531)

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Footnote (1)

Included in these amounts are impacts related to derivatives designated as economic hedges which do not qualify for SFAS 133 hedge accounting treatment of $(419) million and $(834) million in Net Interest Income and $(256) million and $920 million in Noninterest Income. The impact, including $0 and a loss of $(399) million in Gains on Sales of Debt Securities, totaled $(675) million and $(313) million in 2005 and 2004. For additional information, see Note 1 of the Consolidated Financial Statements.

Total Revenue for All Other increased $189 million to $485 million in 2005, primarily driven by an increase in Equity Investment Gains in 2005. Offsetting this increase was the decline in fair value of derivative instruments which were used as economic hedges of interest and foreign exchange rates as part of the ALM process. Changes in value of these derivative instruments were due to interest rate fluctuations during the year.

Provision for Credit Losses decreased $302 million to $41 million in 2005, resulting from changes to components of the formula and other factors effective in 2004, and reduced credit costs in 2005 associated with previously exited businesses. These decreases were offset in part by the establishment of a $50 million reserve for estimated losses associated with Hurricane Katrina.

Gains on Sales of Debt Securities decreased $794 million primarily due to lower gains realized in 2005 on mortgage-backed securities and corporate bonds than in 2004. Securities gains are the result of the repositioning of the securities portfolio to manage interest rate fluctuations and mortgage prepayment risk. The Corporation utilized a forward purchase agreement to hedge the variability of cash flows from the anticipated purchase of securities. The Corporation subsequently sold the related securities and did not originally reclassify the loss from Accumulated OCI at the time the related securities were sold.

Merger and Restructuring Charges decreased $206 million in 2005 as the FleetBoston integration is nearing completion and the infrastructure initiative was completed in the first quarter of 2005. For more information on Merger and Restructuring Charges, see Note 2 of the Consolidated Financial Statements.

The Income Tax Expense (Benefit) was a benefit of $85 million in 2005, compared to an expense of $120 million in 2004. The change in Income Tax Expense (Benefit) was driven by an increase in tax benefits for low-income housing credits. These tax benefits are allocated to Global Consumer and Small Business Banking as FTE Noninterest Income through our segment reporting process. All Other includes an offset to this FTE impact.

Equity Investments

Equity Investments reported Net Income of $796 million in 2005, a $594 million improvement compared to 2004. The improvements were primarily due to higher revenues in Principal Investing driven by increasing liquidity in the private equity markets. When compared to the prior year, Principal Investing revenue increased $966 million to $1.4 billion. The increased revenues were driven by higher realized gains and reduced impairments compared to the prior year.

The following table presents the carrying value of equity investments in the Principal Investing portfolio by major industry at December 31, 2005 and 2004:

		December 31
(Dollars in millions)		2005			2004
Consumer discretionary		$	1,607		$	2,058
Information technology			1,131			1,089
Industrials			1,017			1,118
Telecommunication services			708			769
Financials			632			606
Healthcare			560			576
Materials			288			421
Consumer staples			213			230
Real estate			188			229
Energy			56			81
Individual trusts, nonprofits, government			43			49
Utilities			19			24
Total		$	6,462		$	7,250