Bank of America 2003 Annual Report Download - page 49

On January 28, 2004, the Board of Directors authorized Bank of
America Corporation to file a Shelf Registration Statement with the
Securities and Exchange Commission (SEC). The Shelf Registration
Statement was filed with the SEC on February 11, 2004 and covers
$30.0 billion in debt and equity securities.
On January 15, 2004, Bank of America, N.A. completed a $60.0
billion Bank Note Offering Circular covering senior and subordinated
bank notes. The Offering Circular was filed with the Office of the
Comptroller of the Currency (OCC).
Subsequent to December 31, 2003 through February 25, 2004,
Bank of America Corporation had issued a total of $4.6 billion of long-
term senior and subordinated debt, with maturities ranging from
2009 to 2029.
Trust Preferred Securities
Trust preferred securities (Trust Securities) are issued by the trust
companies (the Trusts) that were deconsolidated by the Corporation
under FIN 46. 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). Obligations associated with these securities are included in
junior subordinated notes related to trust preferred securities in the
long-term debt table on page 94. See Note 15 of the consolidated
financial statements for a discussion regarding the potential change
in treatment for regulatory capital purposes of the Trust Securities.
At December 31, 2003, the Corporation had 14 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
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.
At December 31, 2003, the scheduled maturities for total time
deposits were as follows:
(Dollars in millions)
Due in 2004 $95,412
Due in 2005 7,055
Due in 2006 2,624
Due in 2007 2,356
Due in 2008 1,442
Thereafter 1,615
Total $110,504
Note 12 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, 2003 was $7.6 bil-
lion compared to $114 million at December 31, 2002.
Bank of America, N.A. maintains a domestic program to offer up
to a maximum of $50.0 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 $3.3 billion at December 31, 2003 compared to $1.0 billion
at December 31, 2002. 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, 2003
and 2002:
December 31
(Dollars in millions) 2003 2002
Notes issued by
Bank of America Corporation(1,2)
Senior notes:
Fixed, ranging from 0.73% to 7.50%,
due 2004 to 2028
$8,219 $7,896
Floating, ranging from 0.20% to 6.20%,
due 2004 to 2043
28,669 19,294
Subordinated notes:
Fixed, ranging from 3.95% to 8.57%,
due 2004 to 2033
2,299 14,158
Floating, ranging from 0.60% to 2.38%,
due 2005 to 2037
16,742 5,167
Junior subordinated notes related to
trust preferred securities:(3)
Fixed, ranging from 7.70% to 8.25%,
due 2026 to 2027
2,127 –
Floating, ranging from 1.37% to 1.88%,
due 2027 to 2033 3,344 –
Total notes issued by
Bank of America Corporation 61,400 46,515
Notes issued by Bank of America, N.A. and
other subsidiaries(1,2)
Senior notes:
Fixed, ranging from 0% to 8.50%,
due 2004 to 2033
606 2,223
Floating, ranging from 1.01% to 2.93%,
due 2004 to 2011
3,491 3,229
Subordinated notes:
Fixed, 9.50%, due 2004
300 401
Floating, 1.16%, due 2019 88
Total notes issued by Bank of America, N.A.
and other subsidiaries 4,405 5,861
Notes issued by NB Holdings Corporation(1,2)
Junior subordinated notes related to
trust preferred securities:(3)
Fixed, ranging from 7.70% to 8.06%, due 2026 515 –
Floating, ranging from 1.78%, due 2027 258 –
Total notes issued by NB Holdings
Corporation 773 –
Other debt
Advances from the
Federal Home Loan Bank – Georgia
2,750 2,749
Advances from the
Federal Home Loan Bank – Oregon
5,989 5,992
Other 26 28
Total other debt 8,765 8,769
Total $75,343 $61,145
(1) Fixed-rate and floating-rate classifications as well as interest rates include the effect of interest
rate swap contracts.
(2) Rates and maturity dates reflect outstanding debt at December 31, 2003.
(3) Trust preferred securities vehicles were deconsolidated in 2003 with the resulting liabilities to
the trust companies included as a component of long-term debt.
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. dollars.
At December 31, 2003 and 2002, Bank of America Corporation
was authorized to issue approximately $26.0 billion and $37.5 bil-
lion, respectively, of additional corporate debt and other securities
under its existing shelf registration statements. At December 31,
2003 and 2002, Bank of America, N.A. was authorized to issue
approximately $25.9 billion and $28.2 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, 2003) were 2.36 per-
cent, 6.01 percent and 1.41 percent, respectively, at December 31,
2003 and (based on the rates in effect at December 31, 2002) were
3.56 percent, 6.46 percent and 1.49 percent, respectively, at
December 31, 2002. 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, 2003 are as follows:
94 BANK OF AMERICA 2003 BANK OF AMERICA 2003 95
(Dollars in millions) 2004 2005 2006 2007 2008 Thereafter Total
Bank of America Corporation $6,832 $3,745 $ 8,693 $3,196 $5,139 $33,795 $61,400
Bank of America, N.A. 1,456 160 808 5 452 2,297 5,178
Other 3,905 1,500 2,700 501 4 155 8,765
Total $12,193 $5,405 $12,201 $ 3,702 $ 5,595 $36,247 $75,343