Bank of America 2006 Annual Report Download - page 139

Regulatory Capital Developments
On September 25, 2006, the Agencies officially published updates
specific to U.S. market implementation of the risk-based capital rules
originally published by the Basel Committee of Banking Supervision in
June 2004. These updates provided clarification and additional guidance
related to the rules and their implementation, as well as started an official
comment period, which was subsequently extended in December 2006 for
an additional 90 days.
Several of our international units have begun local parallel
implementation reporting Basel II ratios to their host countries during
2006, with full implementation expected during 2007. With the recently
published updates, revised market risk rules are scheduled to be fully
implemented in 2008, while credit and operational risk rules are subject
to a parallel test period, supervisory approval and subsequent
implementation. During the parallel testing environment, current regulatory
capital measures will be utilized simultaneously with the new rules. During
the three-year implementation period, the U.S. will impose floors (limits)
on capital reductions when compared to current measures.
Regulatory Capital
December 31
2006 2005
Actual Minimum
Required
(1)
Actual Minimum
Required
(1)
(Dollars in millions) Ratio Amount Ratio Amount
Risk-based capital
Tier 1
Bank of America Corporation 8.64% $91,064 $42,181 8.25% $74,375 $36,059
Bank of America, N.A. 8.89 76,174 34,264 8.70 69,547 31,987
FIA Card Services, N.A.
(2)
14.08 19,562 5,558 –– –
Bank of America, N.A. (USA)
(3)
– –– 8.66 5,567 2,570
Total
Bank of America Corporation 11.88 125,226 84,363 11.08 99,901 72,118
Bank of America, N.A. 11.19 95,867 68,529 10.73 85,773 63,973
FIA Card Services, N.A.
(2)
17.02 23,648 11,117 –– –
Bank of America, N.A. (USA)
(3)
–– – 11.46 7,361 5,140
Tier 1 Leverage
Bank of America Corporation 6.36 91,064 42,935 5.91 74,375 37,732
Bank of America, N.A. 6.63 76,174 34,487 6.69 69,547 31,192
FIA Card Services, N.A.
(2)
16.88 19,562 3,478 –– –
Bank of America, N.A. (USA)
(3)
–– – 9.37 5,567 1,783
(1) Dollar amount required to meet guidelines for adequately capitalized institutions.
(2) FIA Card Services, N.A. is presented for periods subsequent to December 31, 2005.
(3) Bank of America, N.A. (USA) merged into FIA Card Services, N.A. on October 20, 2006.
Note 16 – 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 serv-
ice. 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 individual 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 serv-
ice. 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 participant
balances transferred and certain compensation credits from future market
downturns. The Corporation is responsible for funding any shortfall on the
guarantee feature.
As a result of recent mergers, the Corporation assumed the obliga-
tions related to the pension plans of former FleetBoston and MBNA. The
Bank of America Pension Plan for Legacy Fleet (the Fleet Pension Plan) is
substantially similar to the Bank of America Plan discussed above; how-
ever, the Fleet Pension Plan does not allow participants to select various
earnings measures; rather the earnings rate is based on a benchmark
rate. The Bank of America Pension Plan for Legacy MBNA (the MBNA Pen-
sion Plan) retirement benefits are based on the number of years of benefit
service and a percentage of the participant’s average annual compensa-
tion during the five highest paid consecutive years of their last ten years of
employment.
The Corporation sponsors a number of noncontributory, nonqualified
pension plans. As a result of mergers, the Corporation assumed the
obligations related to the noncontributory, nonqualified pension plans of
former FleetBoston and MBNA. These plans, which are unfunded, provide
defined pension benefits to certain employees.
In addition to retirement pension benefits, full-time, salaried employ-
ees and certain part-time employees may become eligible to continue par-
ticipation 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. The obligations assumed as a result of the merger with
FleetBoston are substantially similar to the Corporation’s Postretirement
Health and Life Plans. The MBNA Postretirement Health and Life Plan pro-
vides certain health care and life insurance benefits for a closed group
upon early retirement.
The tables within this Note include the information related to the
MBNA plans described above beginning January 1, 2006 and the Fleet-
Boston plans beginning April 1, 2004.
Bank of America 2006 137