Bank of America 2002 Annual Report Download - page 96

94 BANK OF AMERICA 2002
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 sub-
ordinated notes. The notes may be denominated in U.S. dollars or
foreign currencies. Foreign currency contracts are used to convert
certain foreign-denominated debt into U.S. dollars.
At December 31, 2002 and 2001, Bank of America Corporation
was authorized to issue approximately $65.8 billion and $55.5 billion,
respectively, of additional corporate debt and other securities under
its existing shelf registration statements.
At December 31, 2001, the Corporation had $1.5 billion of mort-
gage-backed bonds outstanding that were collateralized by $3.0 bil-
lion of mortgage loans and cash. These bonds matured in 2002 and no
additional mortgage-backed bonds were issued.
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, 2002) were 3.56 percent, 6.46 per-
cent and 1.49 percent, respectively, at December 31, 2002 and (based on
the rates in effect at December 31, 2001) were 3.44 percent, 7.26 per-
cent, and 2.40 percent, respectively, at December 31, 2001. These obli-
gations were denominated primarily in U.S. dollars.
Subsequent to December 31, 2002 through February 18, 2003, the
Corporation had issued $1.1 billion of long-term senior and subordi-
nated debt, with maturities ranging from 2009 to 2028.
NOTE 12 Trust Preferred Securities
Trust preferred securities are issued by the Corporation through
wholly owned subsidiary trusts (the Trusts). These securities are
mandatorily redeemable preferred security obligations of the Trusts.
The sole assets of the Trusts are Junior Subordinated Deferrable
Interest Notes of the Corporation (the Notes).
At December 31, 2002, the Corporation had 14 wholly-owned
Trusts which have issued trust preferred securities to the public.
Certain of the trust preferred 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 preferred securi-
ties in the Notes. Each issue of the Notes has an interest rate equal to
the corresponding trust preferred securities distribution rate. The
Corporation has the right to defer payment of interest on the Notes at
any time or from time to time for a period not exceeding five years pro-
vided that no extension period may extend beyond the stated maturity
of the relevant Notes. During any such extension period, distributions
on the trust preferred securities will also be deferred, and the
Corporation’s ability to pay dividends on its common and preferred
stock will be restricted.
The trust preferred securities are subject to mandatory redemp-
tion 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 preferred 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 preferred securities.
The Corporation is required by the Federal Reserve Board to
maintain certain levels of capital for bank regulatory purposes. The
Federal Reserve Board has determined that certain cumulative pre-
ferred securities having the characteristics of trust preferred securities
qualify as minority interest, which is included in Tier 1 capital for bank
and financial holding companies. Therefore, trust preferred securities
provide the Corporation with another means of obtaining capital for
bank regulatory purposes.
Aggregate annual maturities of long-term debt obligations (based on final maturity dates) are as follows:
(Dollars in millions) 2003 2004 2005 2006 2007 Thereafter Total
Bank of America Corporation $ 4,212 $ 6,773 $ 4,243 $ 5,512 $ 3,196 $ 22,579 $ 46,515
Bank of America, N.A. 4,007 423 160 808 6 457 5,861
Other – 3,906 1,500 2,700 501 162 8,769
Total $ 8,219 $ 11,102 $ 5,903 $ 9,020 $ 3,703 $ 23,198 $ 61,145