Bank of America 2012 Annual Report Download - page 236

234 Bank of America 2012
of Ocala’s secured parties, principally plaintiffs in the 2009
Actions. The court also granted in part and denied in part BANA’s
motion to dismiss the FDIC’s counterclaims, allowing all but one
of the FDIC’s 16 counterclaims to go forward.
Ocala Bankruptcy
On July 10, 2012, Ocala filed a pre-arranged voluntary Chapter 11
bankruptcy petition in the U.S. Bankruptcy Court for the Middle
District of Florida, pursuant to an agreement among Ocala, BANA,
BNP Paribas Mortgage Corporation, Deutsche Bank AG, the FDIC
and Ocala’s owner, TBW. Among other things, the proposed
bankruptcy plan and certain side agreements would permit the
Ocala bankruptcy trustee to pursue litigation against third parties
to mitigate BANA’s potential losses in the FDIC Action and the
2009 Actions. Certain agreements embodied by that plan,
including an agreement among the parties to allow BANA to assign
claims held in its representative capacities to the Ocala bankruptcy
estate, were approved by the Court on August 23, 2012. The
remainder of the proposed plan is subject to approval by the
bankruptcy court.
NOTE 14 Shareholders’ Equity
Common Stock
Declared Quarterly Cash Dividends on Common Stock
Declaration Date Record Date Payment Date
Dividend
Per Share
January 23, 2013 March 1, 2013 March 22, 2013 $ 0.01
October 24, 2012 December 7, 2012 December 28, 2012 0.01
July 11, 2012 September 7, 2012 September 28, 2012 0.01
April 11, 2012 June 1, 2012 June 22, 2012 0.01
January 11, 2012 March 2, 2012 March 23, 2012 0.01
In 2012 and 2011, in connection with the exchanges described
in Preferred Stock in this Note, the Corporation issued 50 million
and 400 million shares of common stock.
On September 1, 2011, the Corporation closed the sale to
Berkshire Hathaway, Inc. (Berkshire) of 50,000 shares of the
Series T Preferred Stock and a warrant (the Warrant) to purchase
700 million shares of the Corporation’s common stock for an
aggregate purchase price of $5.0 billion in cash. Of the $5.0 billion
in cash proceeds, $2.9 billion was allocated to preferred stock
and $2.1 billion to the Warrant on a relative fair value basis. The
discount on the Series T Preferred Stock is not subject to accretion.
The portion of proceeds allocated to the Warrant was recorded as
additional paid-in capital. The Warrant is exercisable at the holder’s
option at any time, in whole or in part, until September 1, 2021,
at an exercise price of $7.142857 per share of common stock.
The Warrant may be settled in cash or by exchanging all or a portion
of the Series T Preferred Stock. For additional information on the
Berkshire investment and Series T Preferred Stock, see Preferred
Stock in this Note.
At December 31, 2012, the Corporation had warrants
outstanding and exercisable to purchase 121.8 million shares of
common stock at an exercise price of $30.79 per share expiring
on October 28, 2018, and warrants outstanding and exercisable
to purchase 150.4 million shares of common stock at an exercise
price of $13.30 per share expiring on January 16, 2019. These
warrants were originally issued in connection with preferred stock
issuances to the U.S. Department of the Treasury in 2010 and
are listed on the New York Stock Exchange.
In connection with employee stock plans, in 2012, the
Corporation issued approximately 297 million shares and
repurchased approximately 104 million shares of its common
stock to satisfy tax withholding obligations. At December 31,
2012, the Corporation had reserved 1.9 billion unissued shares
of common stock for future issuances under employee stock plans,
common stock warrants, convertible notes and preferred stock.
Preferred Stock
The dividends declared on preferred stock were $1.4 billion for
2012, 2011 and 2010.
In 2012, the Corporation entered into various agreements with
certain preferred stock and Trust Securities holders pursuant to
which the Corporation and the holders of these securities agreed
to exchange shares of various series of non-convertible preferred
stock with a carrying value of $296 million and Trust Securities
with a carrying value of $760 million for 50 million shares of the
Corporation’s common stock with a fair value of $412 million, and
$398 million in cash. The $246 million difference between the
carrying value of the preferred stock and Trust Securities retired
and the fair value of consideration issued was recorded in retained
earnings as a $44 million reduction to preferred stock dividends
and a $202 million gain in noninterest income.
In 2012, the Corporation issued shares of the Corporation’s
Series F Preferred Stock and Series G Preferred Stock for $633
million under stock purchase contracts. For additional information,
see Preferred Stock Summary in this Note and Note 12 – Long-
term Debt.
In 2011, the Corporation entered into separate agreements
with certain institutional preferred stock and Trust Securities
holders (the Exchange Agreements) pursuant to which the
Corporation and the holders of these securities agreed to
exchange shares, or depository shares representing fractional
interests in shares, of various series of the Corporation’s preferred
stock, par value $0.01 per share, or Trust Securities for an
aggregate of 400 million shares of the Corporation’s common
stock valued at $2.2 billion and $2.3 billion aggregate principal
amount of senior notes. The Exchange Agreements related to Trust
Securities are described in Note 12 – Long-term Debt and the
Exchange Agreements related to preferred stock are described
below.
As part of the Exchange Agreements, the Corporation
exchanged non-convertible preferred stock, with an aggregate
liquidation preference of $815 million and carrying value of $814
million, for 72 million shares of common stock valued at $399
million and senior notes valued at $231 million. The $184 million
difference between the carrying value of the non-convertible
preferred stock and the fair value of the consideration issued to
the holders of the non-convertible preferred stock was recorded
in retained earnings as a non-cash reduction to preferred stock
dividends.
Additionally, as a part of the Exchange Agreements, a portion
of the Series L 7.25% Non-Cumulative Perpetual Convertible
Preferred Stock (Series L Preferred Stock) with an aggregate
liquidation preference and carrying value of $269 million was
exchanged for 20 million common shares valued at $123 million
and senior notes valued at $129 million. The $17 million difference
between the carrying value of the Series L Preferred Stock and the
fair value of the consideration issued to holders of the Series L