Bank of America 2008 Annual Report Download - page 153

(Dollars in millions) 2009 2010 2011 2012 2013 Thereafter Total
Bank of America Corporation $18,411 $21,781 $13,299 $25,928 $ 7,233 $84,810 $171,462
Bank of America, N.A. and other subsidiaries 15,466 11,584 75 5,667 86 10,081 42,959
NB Holdings Corporation –––––258258
BAC North America Holding Company and subsidiaries 73 92 51 15 26 1,736 1,993
Other 8,932 15,947 13,604 5,490 5,026 2,621 51,620
Total $42,882 $49,404 $27,029 $37,100 $12,371 $99,506 $268,292
At December 31, 2008 and 2007, Bank of America Corporation was
authorized to issue approximately $92.9 billion and $64.0 billion of addi-
tional corporate debt and other securities under its existing shelf registra-
tion statements. At December 31, 2008 and 2007, Bank of America,
N.A. was authorized to issue approximately $48.3 billion and $62.1 bil-
lion of bank notes. At both December 31, 2008 and 2007, Bank of Amer-
ica, N.A. was authorized to issue approximately $20.6 billion of additional
mortgage notes.
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, 2008) were 4.26 percent, 5.05 percent and 2.80
percent, respectively, at December 31, 2008 and (based on the rates in
effect at December 31, 2007) were 5.09 percent, 5.21 percent and 4.93
percent, respectively, at December 31, 2007. 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, 2008 are included in the table
above.
Trust Preferred and Hybrid Securities
Trust preferred securities (Trust Securities) are issued by trust companies
(the Trusts) which are not consolidated. These Trust 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 or its subsidiaries (the Notes). The Trusts are
100 percent owned finance subsidiaries of the Corporation. Obligations
associated with the Notes are included in the Long-term Debt table on the
previous page.
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 pay-
ment 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 repay-
ment 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 Corpo-
ration’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.
Hybrid Income Term Securities (HITS) totaling $1.6 billion were also
issued by the Trusts to institutional investors in 2007. The BAC Capital
Trust XIII Floating Rate Preferred HITS have a distribution rate of three-
month LIBOR plus 40 bps and the BAC Capital Trust XIV Fixed-to-Floating
Rate Preferred HITS have an initial distribution rate of 5.63 percent. Both
series of HITS represent beneficial interests in the assets of the
respective capital trust, which consists of a series of the Corporation’s
junior subordinated notes and a stock purchase contract for a specified
series of the Corporation’s preferred stock. The Corporation will remarket
the junior subordinated notes underlying each series of HITS on or about
the five year anniversary of the issuance to obtain sufficient funds for the
capital trusts to buy the Corporation’s preferred stock under the stock
purchase contracts.
In connection with the HITS, the Corporation entered into two replace-
ment capital covenants for the benefit of investors in certain series of the
Corporation’s long-term indebtedness (Covered Debt). As of
December 31, 2008, the Corporation’s 6.625% Junior Subordinated
Notes due 2036 constitutes the Covered Debt under the covenant corre-
sponding to the Floating Rate Preferred HITS and the Corporation’s
5.625% Junior Subordinated Notes due 2035 constitutes the Covered
Debt under the covenant corresponding to the Fixed-to-Floating Rate Pre-
ferred HITS. These covenants generally restrict the ability of the Corpo-
ration and its subsidiaries to redeem or purchase the HITS and related
securities unless the Corporation has obtained the prior approval of the
Board of Governors of the Federal Reserve System (FRB) if required under
the FRB’s capital guidelines, the redemption or purchase price of the
HITS does not exceed the amount received by the Corporation from the
sale of certain qualifying securities, and such replacement securities
qualify as Tier 1 Capital and are not “restricted core capital elements”
under the FRB’s guidelines.
Included in the outstanding Trust Securities and Notes in the following
table are non-consolidated wholly owned subsidiary funding vehicles of
BAC North America Holding Company (BACNAH) and its subsidiaries that
issued preferred securities (Funding Securities). These subsidiary funding
vehicles have invested the proceeds of their Funding Securities in sepa-
rate series of preferred securities of BACNAH or its subsidiaries, as appli-
cable (BACNAH Preferred Securities). The BACNAH Preferred Securities
(and the corresponding Funding Securities) are non-cumulative and permit
nonpayment of dividends within certain limitations. The issuance dates
for the BACNAH Preferred Securities (and the related Funding Securities)
range from 2000 to 2001. These Funding Securities are subject to
mandatory redemption upon repayment by the issuer of the corresponding
series of BACNAH Preferred Securities at a redemption price equal to
their liquidation amount plus accrued and unpaid distributions for up to
one quarter.
For additional information on Trust Securities for regulatory capital
purposes, see Note 15 – Regulatory Requirements and Restrictions to
the Consolidated Financial Statements.
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