Bank of America 2013 Annual Report Download - page 202

200 Bank of America 2013
Credit Card Securitizations
The Corporation securitizes originated and purchased credit card
loans. The Corporation’s continuing involvement with the
securitization trusts includes servicing the receivables, retaining
an undivided interest (seller’s interest) in the receivables, and
holding certain retained interests including senior and subordinate
securities, discount receivables, subordinate interests in accrued
interest and fees on the securitized receivables, and cash reserve
accounts. The seller’s interest in the trusts, which is pari passu
to the investors’ interest, and the discount receivables are
classified in loans and leases.
The table below summarizes select information related to
consolidated credit card securitization trusts in which the
Corporation held a variable interest at December 31, 2013 and
2012.
Credit Card VIEs
December 31
(Dollars in millions) 2013 2012
Consolidated VIEs
Maximum loss exposure $ 49,621 $ 42,487
On-balance sheet assets
Derivative assets $182 $ 323
Loans and leases (1) 61,241 66,427
Allowance for loan and lease losses (2,585)(3,445)
Loans held-for-sale 386 —
All other assets (2) 2,281 1,567
Total $61,505 $ 64,872
On-balance sheet liabilities
Long-term debt $11,822 $ 22,291
All other liabilities 62 94
Total $11,884 $ 22,385
(1) At December 31, 2013 and 2012, loans and leases included $41.2 billion and $33.5 billion of seller’s interest and $14 million and $124 million of discount receivables.
(2) At December 31, 2013 and 2012, all other assets included restricted cash and short-term investment accounts and unbilled accrued interest and fees.
The Corporation holds subordinate securities with a notional
principal amount of $7.9 billion and $10.1 billion at December 31,
2013 and 2012, and a stated interest rate of zero percent issued
by certain credit card securitization trusts. In addition, during 2010
and 2009, the Corporation elected to designate a specified
percentage of new receivables transferred to the trusts as
“discount receivables” such that principal collections thereon are
added to finance charges which increases the yield in the trust.
Through the designation of newly transferred receivables as
discount receivables, the Corporation subordinated a portion of
its seller’s interest to the investors’ interest. These actions were
taken to address the decline in the excess spread of the U.S. and
U.K. credit card securitization trusts at that time.
During 2012, the Corporation transferred $553 million of credit
card receivables to a third-party sponsored securitization vehicle.
The Corporation no longer services the credit card receivables and
does not consolidate the vehicle. At December 31, 2013 and
2012, the Corporation held a senior interest of $272 million and
$309 million in these receivables, classified in loans and leases,
that is not included in the table above.