Bank of America 2013 Annual Report Download - page 23

Bank of America 2013 21
Recent Events
BNY Mellon Settlement
In the first quarter of 2014, the New York Supreme Court entered
final judgment approving the BNY Mellon Settlement. The court
overruled the objections to the settlement, holding that the Trustee,
BNY Mellon, acted in good faith, within its discretion and within
the bounds of reasonableness in determining that the settlement
agreement was in the best interests of the covered trusts. The
court declined to approve the Trustee’s conduct only with respect
to the Trustee’s consideration of a potential claim that a loan must
be repurchased if the servicer modifies its terms. The court’s
January 31, 2014 decision, order and judgment remain subject to
appeal and the motion to reargue, and it is not possible to predict
the timetable for appeals or when the court approval process will
be completed. For additional information, including a description
of the BNY Mellon Settlement, see Note 7 – Representations and
Warranties Obligations and Corporate Guarantees to the
Consolidated Financial Statements.
Capital and Liquidity Related Matters
In July 2013, U.S. banking regulators approved final Basel 3
Regulatory Capital rules (Basel 3) which became effective January
1, 2014. Basel 3 generally continues to be subject to interpretation
by the U.S. banking regulators. Basel 3 also will require us to
calculate a supplementary leverage ratio. For additional
information, see Capital Management – Regulatory Capital
Changes on page 64.
The Basel Committee on Banking Supervision (Basel
Committee) issued two liquidity risk-related standards that are
considered part of Basel 3: the Liquidity Coverage Ratio (LCR) and
the Net Stable Funding Ratio (NSFR). For additional information,
see Liquidity Risk – Basel 3 Liquidity Standards on page 69.
Freddie Mac Settlement
On November 27, 2013, we entered into an agreement with Freddie
Mac (FHLMC) under which we paid FHLMC a total of $404 million
(less credits of $13 million) to resolve all outstanding and potential
mortgage repurchase and make-whole claims arising out of any
alleged breach of selling representations and warranties related
to loans that had been sold directly to FHLMC by entities related
to Bank of America, N.A. from January 1, 2000 to December 31,
2009, and to compensate FHLMC for certain past losses and
potential future losses relating to denials, rescissions and
cancellations of mortgage insurance (MI).
In 2010, we had entered into an agreement with FHLMC to
resolve all outstanding and potential representations and
warranties claims related to loans sold by Countrywide Financial
Corporation (Countrywide) to FHLMC through 2008.
With these agreements, combined with prior settlements with
Fannie Mae (FNMA), Bank of America has resolved substantially
all outstanding and potential representations and warranties
claims on whole loans sold by legacy Bank of America and
Countrywide to FNMA and FHLMC through 2008 and 2009,
respectively, subject to certain exceptions which we do not believe
are material.
For additional information, see Note 7 – Representations and
Warranties Obligations and Corporate Guarantees to the
Consolidated Financial Statements.
Common Stock Repurchases and Liability
Management Actions
As disclosed in prior filings, the capital plan that the Corporation
submitted to the Federal Reserve in January 2013 pursuant to the
2013 Comprehensive Capital Analysis and Review (CCAR),
included a request to repurchase up to $5.0 billion of common
stock and redeem $5.5 billion in preferred stock over four quarters
beginning in the second quarter of 2013, and continue the
quarterly common stock dividend at $0.01 per share. During 2013,
we repurchased and retired 231.7 million common shares for an
aggregate purchase price of approximately $3.2 billion and
redeemed our Series H and 8 preferred stock for $5.5 billion. As
of December 31, 2013, under the capital plan, we can purchase
up to $1.8 billion of additional common stock through the first
quarter of 2014.
In addition to the CCAR actions, during 2013, we redeemed
certain of our preferred stock for $1.0 billion and issued $1.0
billion of our Fixed-to-Floating Rate Semi-annual Non-Cumulative
Preferred Stock, Series U. For additional information, see Capital
Management – Regulatory Capital on page 61 and Note 13 –
Shareholders’ Equity to the Consolidated Financial Statements.
During 2013, we repurchased certain of our debt and trust
preferred securities with an aggregate carrying value of $10.1
billion for $10.2 billion in cash.
We may conduct additional redemptions, tender offers,
exercises and other transactions in the future depending on
prevailing market conditions, capital, liquidity and other factors.