Bank of America 2011 Annual Report Download - page 213

Bank of America 2011 211
At December 31, 2011 and 2010, Bank of America Corporation
had approximately $69.8 billion and $88.4 billion of authorized,
but unissued corporate debt and other securities under its existing
U.S. shelf registration statements. At December 31, 2011 and
2010, Bank of America, N.A. had approximately $67.3 billion and
$53.3 billion of authorized, but unissued bank notes under its
existing $75 billion bank note program. Long-term bank notes
issued and outstanding under the program totaled $6.3 billion and
$7.1 billion at December 31, 2011 and 2010. At both
December 31, 2011 and 2010, Bank of America, N.A. had
approximately $20.6 billion of authorized, but unissued mortgage
notes under its $30.0 billion mortgage bond program.
The weighted-average effective interest rates for total long-term
debt (excluding senior structured notes), total fixed-rate debt and
total floating-rate debt, were 4.35 percent, 5.17 percent and 1.38
percent, respectively, at December 31, 2011 and 3.96 percent,
5.02 percent and 1.09 percent, respectively, at December 31,
2010. The Corporation’s ALM activities maintain an overall interest
rate risk management strategy that incorporates the use of
interest rate contracts to manage fluctuations in earnings that are
caused by interest rate volatility. The Corporation’s goal is to
manage interest rate sensitivity so that movements in interest
rates do not significantly adversely affect earnings and capital.
The above weighted-average rates are the contractual interest
rates on the debt and do not reflect the impacts of derivative
transactions.
The weighted-average interest rate for debt, excluding senior
structured notes, issued by Merrill Lynch & Co., Inc. and
subsidiaries was 4.74 percent and 4.11 percent at December 31,
2011 and 2010. As of December 31, 2011, the Corporation has
not assumed or guaranteed the $105.6 billion of long-term debt
that was issued or guaranteed by Merrill Lynch & Co., Inc. or its
subsidiaries prior to the acquisition of Merrill Lynch by the
Corporation. All existing Merrill Lynch & Co., Inc. guarantees of
securities issued by certain Merrill Lynch subsidiaries under
various non-U.S. securities offering programs will remain in full
force and effect as long as those securities are outstanding, and
the Corporation has not assumed any of those prior Merrill Lynch
& Co., Inc. guarantees or otherwise guaranteed such securities.
Certain senior structured notes are accounted for under the
fair value option. For more information on these senior structured
notes, see Note 23 – Fair Value Option.
The table below represents the carrying value for aggregate
annual maturities of long-term debt at December 31, 2011.
Long-term Debt by Maturity
(Dollars in millions)
Bank of America Corporation
Merrill Lynch & Co., Inc. and subsidiaries
Bank of America, N.A. and other subsidiaries
Other debt
Total long-term debt excluding consolidated VIEs
Long-term debt of consolidated VIEs
Total long-term debt
2012
$ 43,877
22,494
5,776
13,738
85,885
11,530
$ 97,415
2013
$ 9,967
16,579
—
4,888
31,434
14,353
$ 45,787
2014
$ 19,166
17,784
29
1,658
38,637
9,201
$ 47,838
2015
$ 13,895
4,415
—
380
18,690
1,330
$ 20,020
2016
$ 20,575
3,897
1,134
15
25,621
2,898
$ 28,519
Thereafter
$ 73,940
38,954
7,928
2,122
122,944
9,742
$ 132,686
Total
$ 181,420
104,123
14,867
22,801
323,211
49,054
$ 372,265
Included in the above table are certain structured notes that
contain provisions whereby the borrowings are redeemable at the
option of the holder (put options) at specified dates prior to
maturity. Other structured notes have coupon or repayment terms
linked to the performance of debt or equity securities, indices,
currencies or commodities and the maturity may be accelerated
based on the value of a referenced index or security. In both cases,
the Corporation or a subsidiary may be required to settle the
obligation for cash or other securities prior to the contractual
maturity date. These borrowings are reflected in the above table
as maturing at their earliest put or redemption date.
Trust Preferred and Hybrid Securities
Trust preferred securities (Trust Securities) are primarily issued by
trust companies (the Trusts) that are not consolidated. These Trust
Securities are mandatorily redeemable preferred security
obligations of the Trusts. The sole assets of the Trusts generally
are junior subordinated deferrable interest notes of the
Corporation or its subsidiaries (the Notes). The Trusts generally
are 100 percent-owned finance subsidiaries of the Corporation.
Obligations associated with the Notes are included in the long-
term debt table on page 210.
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 generally 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 generally 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 or its subsidiaries 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,
generally 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
issued by the Trusts to institutional investors during 2007. The
BAC Capital Trust XIII Floating-Rate Preferred HITS had a
distribution rate of three-month LIBOR plus 40 bps and the BAC
Capital Trust XIV Fixed-to-Floating Rate Preferred HITS had an initial
distribution rate of 5.63 percent. Both series of HITS represent