Bank of America 2004 Annual Report Download - page 137

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136 BANK OF AMERICA 2004
Note 15
Employee Benefit Plans
Pension and Postretirement Plans
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.
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 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:
December 31
2004 2003
Actual Minimum Actual Minimum
(Dollars in millions) Ratio Amount Required(1) Ratio Amount Required(1)
Risk-based capital
Tier 1
Bank of America Corporation 8.10% $64,281 $31,741 7.85% $44,050 22,452
Bank of America, N.A. 8.29 46,891 22,614 8.73 42,030 19,247
Fleet National Bank 10.10 14,741 5,837 –––
Bank of America, N.A. (USA) 8.54 3,879 1,817 8.41 3,079 1,465
Total
Bank of America Corporation 11.63 92,266 63,482 11.87 66,651 44,904
Bank of America, N.A. 10.33 58,424 45,228 11.31 54,408 38,494
Fleet National Bank 13.32 19,430 11,673 –––
Bank of America, N.A. (USA) 11.93 5,418 3,634 12.29 4,502 2,930
Leverage
Bank of America Corporation 5.82 64,281 33,142 5.73 44,050 23,055
Bank of America, N.A. 6.27 46,891 22,445 6.88 42,030 18,319
Fleet National Bank 8.15 14,741 5,427 –––
Bank of America, N.A. (USA) 9.19 3,879 1,266 9.17 3,079 1,008
(1) Dollar amount required to meet guidelines for adequately capitalized institutions.