Bank of America 2013 Annual Report Download - page 232

230 Bank of America 2013
NOTE 13 Shareholders’ Equity
Common Stock
Declared Quarterly Cash Dividends on Common Stock
Declaration Date Record Date Payment Date
Dividend
Per Share
February 11, 2014 March 7, 2014 March 28, 2014 $ 0.01
October 24, 2013 December 6, 2013 December 27, 2013 0.01
July 24, 2013 September 6, 2013 September 27, 2013 0.01
April 30, 2013 June 7, 2013 June 28, 2013 0.01
January 23, 2013 March 1, 2013 March 22, 2013 0.01
On March 14, 2013, the Corporation announced that its Board
of Directors (Board) authorized the repurchase of up to $5.0 billion
of common stock over four quarters beginning in the second
quarter of 2013. The timing and amount of common stock
repurchases have been and will continue to be consistent with the
Corporation’s 2013 capital plan and will be subject to various
factors, including the Corporation’s capital position, liquidity,
applicable legal considerations, financial performance and
alternative uses of capital, stock trading price, and general market
conditions, and may be suspended at any time. The remaining
common stock repurchases may be effected through open market
purchases or privately negotiated transactions, including
repurchase plans that satisfy the conditions of Rule 10b5-1 of the
Securities Exchange Act of 1934.
In 2013, the Corporation repurchased and retired 231.7 million
shares of common stock, which reduced shareholders’ equity by
$3.2 billion.
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
Corporation’s 6% Cumulative Perpetual Preferred Stock, Series T
(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 more information on the
Berkshire investment and Series T Preferred Stock, see Preferred
Stock in this Note.
At December 31, 2013, 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 2013, the
Corporation issued approximately 74 million shares and
repurchased approximately 29 million shares of its common stock
to satisfy tax withholding obligations. At December 31, 2013, the
Corporation had reserved 1.8 billion unissued shares of common
stock for future issuances under employee stock plans, common
stock warrants, convertible notes and preferred stock.
Preferred Stock
The cash dividends declared on preferred stock were $1.2 billion,
$1.5 billion and $1.3 billion for 2013, 2012 and 2011.
In 2013, the Corporation redeemed for $6.6 billion its Non-
Cumulative Preferred Stock, Series H, J, 6, 7 and 8. The $100
million difference between the carrying value of $6.5 billion and
the redemption price of the preferred stock was recorded as a
preferred stock dividend. In addition, the Corporation issued $1.0
billion of its Fixed-to-Floating Rate Semi-annual Non-Cumulative
Preferred Stock, Series U.
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 a $44 million
reduction to preferred stock dividends recorded in retained
earnings and a $202 million gain recorded 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
the Preferred Stock Summary table in this Note and Note 11 –
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 11 – 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.