Bank of America 2014 Annual Report Download - page 222

220 Bank of America 2014
NOTE 13 Shareholders’ Equity
Common Stock
Declared Quarterly Cash Dividends on Common Stock (1)
Declaration Date Record Date Payment Date
Dividend
Per Share
February 10, 2015 March 6, 2015 March 27, 2015 $ 0.05
October 23, 2014 December 5, 2014 December 26, 2014 0.05
August 6, 2014 September 5, 2014 September 26, 2014 0.05
June 18, 2014 June 24, 2014 June 30, 2014 0.01
February 11, 2014 March 7, 2014 March 28, 2014 0.01
(1) In 2014 and through February 25, 2015.
The Corporation repurchased and retired 101.1 million and
231.7 million shares of common stock, which reduced
shareholders’ equity by $1.7 billion and $3.2 billion in 2014 and
2013. In 2012, in connection with the exchanges described in
Preferred Stock in this Note, the Corporation issued 50 million
shares of its common stock.
At December 31, 2014, 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 $13.24 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 2009 and
2008, and are listed on the New York Stock Exchange. The terms
of the warrants expiring on January 16, 2019 include a provision
that requires an adjustment to the exercise price when the
Corporation declares quarterly dividends at a level greater than
$0.01 per common share. As a result of the Corporation’s third-
and fourth-quarter 2014 dividends of $0.05 per common share,
the exercise price of the warrants expiring on January 16, 2019
was adjusted from $13.30 to $13.24. The exercise price of these
warrants is subject to continued adjustment each time the
quarterly cash dividend is in excess of $0.01 per common share
to compensate the shareholder for dilution resulting from an
increased dividend, including as a result of the declaration of a
quarterly common stock dividend of $0.05 per common share to
be paid on March 27, 2015 to shareholders of record on March 6,
2015. The warrants expiring on October 18, 2018 also contain
this anti-dilution provision except the adjustment is triggered only
when the Corporation declares quarterly dividends at a level
greater than $0.32 per common share.
In connection with the issuance of the Corporation’s 6%
Cumulative Perpetual Preferred Stock, Series T (the Series T
Preferred Stock), the Corporation issued a warrant to purchase
700 million shares of the Corporation’s common stock. 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 Series T Preferred
Stock, see Preferred Stock in this Note.
In connection with employee stock plans, in 2014, the
Corporation issued approximately 43 million shares and
repurchased approximately 17 million shares of its common stock
to satisfy tax withholding obligations. At December 31, 2014, 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 $1.0 billion,
$1.2 billion and $1.5 billion for 2014, 2013 and 2012.
On January 27, 2015, the Corporation issued 44,000 shares
of its 6.500% Non-Cumulative Preferred Stock, Series Y for $1.1
billion. Dividends are paid quarterly commencing on April 27,
2015. Series Y Preferred Stock has a liquidation preference of
$25,000 per share and is subject to certain restrictions in the
event that the Corporation fails to declare and pay full dividends.
At the Corporation’s annual meeting of stockholders on May
7, 2014, the stockholders approved an amendment to the Series
T Preferred Stock such that it qualifies as Tier 1 capital, and the
amendment became effective in the three months ended June 30,
2014. The more significant changes to the terms of the Series T
Preferred Stock in the amendment were: (1) dividends are no longer
cumulative; (2) the dividend rate is fixed at 6%; and (3) the
Corporation may redeem the Series T Preferred Stock only after
the fifth anniversary of the effective date of the amendment.
In 2014, the Corporation issued $6.0 billion of its Preferred
Stock, Series V, X, W and Z. On June 17, 2014, the Corporation
issued 60,000 shares of its Fixed-to-Floating Rate Non-Cumulative
Preferred Stock, Series V for $1.5 billion. Dividends are paid semi-
annually commencing on December 17, 2014. On September 5,
2014, the Corporation issued 80,000 shares of its Fixed-to-
Floating Rate Non-Cumulative Preferred Stock, Series X for $2.0
billion. Dividends are paid semi-annually commencing on March
5, 2015. On September 9, 2014, the Corporation issued 44,000
shares of its 6.625% Non-Cumulative Preferred Stock, Series W
for $1.1 billion. Dividends are paid quarterly commencing on
December 9, 2014. On October 23, 2014, the Corporation issued
56,000 shares of its Fixed-to-Floating Rate Non-Cumulative
Preferred Stock, Series Z for $1.4 billion. Dividends are paid semi-
annually commencing on April 23, 2015. Series V, X, W and Z
preferred stock have a liquidation preference of $25,000 per share
and are subject to certain restrictions in the event that the
Corporation fails to declare and pay full dividends.
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.