Long-term Debt
Long-term debt consists of borrowings having an original maturity of one year or more. The table below presents the balance of long-term debt at December 31, 2013 and 2012, and the related contractual rates and maturity dates as of December 31, 2013.
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| December 31 |
(Dollars in millions) | 2013 | | 2012 |
Notes issued by Bank of America Corporation (1) | |
| | |
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Senior notes: | |
| | |
|
Fixed, with a weighted-average rate of 4.99%, ranging from 1.25% to 8.83%, due 2014 to 2042 | $ | 109,845 |
| | $ | 114,493 |
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Floating, with a weighted-average rate of 0.99%, ranging from 0.05% to 4.99%, due 2014 to 2044 | 22,268 |
| | 24,698 |
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Senior structured notes | 30,575 |
| | 33,962 |
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Subordinated notes: | |
| | |
|
Fixed, with a weighted-average rate of 5.83%, ranging from 2.40% to 10.20%, due 2014 to 2038 | 22,379 |
| | 24,118 |
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Floating, with a weighted-average rate of 1.13%, ranging from 0.57% to 2.97%, due 2016 to 2026 | 1,798 |
| | 1,767 |
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Junior subordinated notes (related to trust preferred securities): | |
| | |
|
Fixed, with a weighted-average rate of 6.84%, ranging from 5.25% to 8.05%, due 2027 to perpetual | 6,685 |
| | 6,655 |
|
Floating, with a weighted-average rate of 0.92%, ranging from 0.79% to 1.24%, due 2027 to 2056 | 553 |
| | 567 |
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Total notes issued by Bank of America Corporation | 194,103 |
| | 206,260 |
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Notes issued by Bank of America, N.A. | |
| | |
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Senior notes: | |
| | |
|
Fixed, with a weighted-average rate of 2.97%, ranging from 0.07% to 7.72%, due 2014 to 2187 | 1,670 |
| | 181 |
|
Floating, with a weighted-average rate of 0.70%, ranging from 0.35% to 0.75%, due 2016 to 2041 | 3,684 |
| | 2,686 |
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Subordinated notes: | |
| | |
|
Fixed, with a weighted-average rate of 5.68%, ranging from 5.30% to 6.10%, due 2016 to 2036 | 4,876 |
| | 5,230 |
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Floating, with a weighted-average rate of 0.53%, ranging from 0.25% to 0.54%, due 2016 to 2019 | 1,401 |
| | 1,401 |
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Advances from Federal Home Loan Banks: | | | |
Fixed, with a weighted-average rate of 4.91%, ranging from 0.01% to 7.72%, due 2014 to 2034 | 1,441 |
| | 6,225 |
|
Floating, with a weighted-average rate of 0.28%, ranging from 0.27% to 0.29%, due 2015 to 2016 | 3,001 |
| | — |
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Total notes issued by Bank of America, N.A. | 16,073 |
| | 15,723 |
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Other debt | |
| | |
|
Senior notes: | | | |
Fixed, with a weighted-average rate of 5.01%, ranging from 4.00% to 5.50%, due 2014 to 2021 | 194 |
| | 262 |
|
Floating, with a weighted-average rate of 2.55%, ranging from 1.93% to 2.71%, due 2014 to 2015 | 115 |
| | 705 |
|
Structured liabilities | 16,913 |
| | 16,127 |
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Junior subordinated notes (related to trust preferred securities): | | | |
Fixed, with a weighted-average rate of 7.14%, ranging from 7.00% to 7.28%, perpetual | 340 |
| | 340 |
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Floating, with a weighted-average rate of 0.87%, due 2027 | 66 |
| | 979 |
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Other | 2,422 |
| | 933 |
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Total other debt | 20,050 |
| | 19,346 |
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Total long-term debt excluding consolidated VIEs | 230,226 |
| | 241,329 |
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Long-term debt of consolidated VIEs | 19,448 |
| | 34,256 |
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Total long-term debt | $ | 249,674 |
| | $ | 275,585 |
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(1) | On October 1, 2013, the merger of Merrill Lynch & Co., Inc. into Bank of America Corporation was completed. Effective with this merger, Bank of America Corporation assumed outstanding Merrill Lynch & Co., Inc. debt including trust preferred securities. |
Bank of America Corporation and Bank of America, N.A. maintain various U.S. and non-U.S. debt programs to offer both senior and subordinated notes. The notes may be denominated in U.S. dollars or foreign currencies. At December 31, 2013 and 2012, the amount of foreign currency-denominated debt translated into U.S. dollars included in total long-term debt was $73.4 billion and $95.3 billion. Foreign currency contracts may be used to convert certain foreign currency-denominated debt into U.S. dollars.
At December 31, 2013, long-term debt of consolidated VIEs in the table above included debt of credit card, home equity and all other VIEs of $11.8 billion, $1.5 billion and $6.2 billion, respectively. Long-term debt of VIEs is collateralized by the assets of the VIEs. For additional information, see Note 6 – Securitizations and Other Variable Interest Entities.
At December 31, 2013 and 2012, Bank of America Corporation had approximately $131.3 billion and $154.9 billion of authorized, but unissued corporate debt and other securities under its existing U.S. shelf registration statements. At December 31, 2013 and 2012, Bank of America, N.A. had $51.8 billion and $65.5 billion of authorized, but unissued bank notes under its existing $75 billion bank note program. Long-term bank notes issued and outstanding under the program totaled $8.1 billion and $5.6 billion at December 31, 2013 and 2012. At both December 31, 2013 and 2012, Bank of America, N.A. had $20.6 billion of authorized, but unissued mortgage notes under its $30 billion mortgage bond program.
The weighted-average effective interest rates for total long-term debt (excluding senior structured notes), total fixed-rate debt and total floating-rate debt were 4.37 percent, 5.14 percent and 0.92 percent, respectively, at December 31, 2013 and 4.71 percent, 5.52 percent and 0.93 percent, respectively, at December 31, 2012. The Corporation’s ALM activities maintain an overall interest rate risk management strategy that incorporates the use of interest rate contracts to manage fluctuations in earnings that are caused by interest rate volatility. The Corporation’s goal is to manage interest rate sensitivity so that movements in interest rates do not significantly adversely affect earnings and capital. The weighted-average rates are the contractual interest rates on the debt and do not reflect the impacts of derivative transactions.
Certain senior structured notes are accounted for under the fair value option. For more information on these senior structured notes, see Note 21 – Fair Value Option.
The table below shows the carrying value for aggregate annual contractual maturities of long-term debt as of December 31, 2013. Included in the table are certain structured notes issued by the Corporation that contain provisions whereby the borrowings are redeemable at the option of the holder (put options) at specified dates prior to maturity. Other structured notes have coupon or repayment terms linked to the performance of debt or equity securities, indices, currencies or commodities and the maturity may be accelerated based on the value of a referenced index or security. In both cases, the Corporation or a subsidiary may be required to settle the obligation for cash or other securities prior to the contractual maturity date. These borrowings are reflected in the table as maturing at their contractual maturity date.
In 2013 and 2012, in a combination of tender offers, calls and open-market transactions, the Corporation purchased senior and subordinated long-term debt with a carrying value of $9.2 billion and $12.4 billion, and recorded net losses of $59 million and net gains of $1.3 billion in connection with these transactions. During 2013, the Corporation had total long-term debt maturities and purchases of $65.6 billion consisting of $39.3 billion for Bank of America Corporation, $4.8 billion for Bank of America, N.A., $7.0 billion of other debt and $14.5 billion for consolidated VIEs.
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Long-term Debt by Maturity | | | | | | | | | | | | | |
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(Dollars in millions) | 2014 | | 2015 | | 2016 | | 2017 | | 2018 | | Thereafter | | Total |
Bank of America Corporation (1) | | | | | | | | | | | | | |
Senior notes | $ | 24,820 |
| | $ | 15,365 |
| | $ | 18,164 |
| | $ | 18,273 |
| | $ | 20,311 |
| | $ | 35,180 |
| | $ | 132,113 |
|
Senior structured notes | 6,360 |
| | 5,561 |
| | 3,429 |
| | 1,421 |
| | 1,989 |
| | 11,815 |
| | 30,575 |
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Subordinated notes | 4 |
| | 1,263 |
| | 5,247 |
| | 5,676 |
| | 3,312 |
| | 8,675 |
| | 24,177 |
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Junior subordinated notes | — |
| | — |
| | — |
| | — |
| | — |
| | 7,238 |
| | 7,238 |
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Total Bank of America Corporation | 31,184 |
| | 22,189 |
| | 26,840 |
| | 25,370 |
| | 25,612 |
| | 62,908 |
| | 194,103 |
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Bank of America, N.A. | | | | | | | | | | | | | |
Senior notes | 19 |
| | — |
| | 2,492 |
| | 2,664 |
| | — |
| | 179 |
| | 5,354 |
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Subordinated notes | — |
| | — |
| | 1,082 |
| | 3,664 |
| | — |
| | 1,531 |
| | 6,277 |
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Advances from Federal Home Loan Banks | 1,263 |
| | 1,503 |
| | 1,504 |
| | 11 |
| | 11 |
| | 150 |
| | 4,442 |
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Total Bank of America, N.A. | 1,282 |
| | 1,503 |
| | 5,078 |
| | 6,339 |
| | 11 |
| | 1,860 |
| | 16,073 |
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Other debt | | | | | | | | | | | | | |
Senior notes | 284 |
| | 24 |
| | — |
| | 1 |
| | — |
| | — |
| | 309 |
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Structured liabilities | 3,614 |
| | 2,049 |
| | 1,520 |
| | 1,723 |
| | 1,281 |
| | 6,726 |
| | 16,913 |
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Junior subordinated notes | — |
| | — |
| | — |
| | — |
| | — |
| | 406 |
| | 406 |
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Other | 200 |
| | 56 |
| | 930 |
| | 743 |
| | 37 |
| | 456 |
| | 2,422 |
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Total other debt | 4,098 |
| | 2,129 |
| | 2,450 |
| | 2,467 |
| | 1,318 |
| | 7,588 |
| | 20,050 |
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Total long-term debt excluding consolidated VIEs | 36,564 |
| | 25,821 |
| | 34,368 |
| | 34,176 |
| | 26,941 |
| | 72,356 |
| | 230,226 |
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Long-term debt of consolidated VIEs | 9,512 |
| | 1,255 |
| | 1,797 |
| | 1,522 |
| | 191 |
| | 5,171 |
| | 19,448 |
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Total long-term debt | $ | 46,076 |
| | $ | 27,076 |
| | $ | 36,165 |
| | $ | 35,698 |
| | $ | 27,132 |
| | $ | 77,527 |
| | $ | 249,674 |
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(1) | On October 1, 2013, the merger of Merrill Lynch & Co., Inc. into Bank of America Corporation was completed. Effective with this merger, Bank of America Corporation assumed outstanding Merrill Lynch & Co., Inc. debt including trust preferred securities. |
Trust Preferred and Hybrid Securities
Trust preferred securities (Trust Securities) are primarily issued by trust companies (the Trusts) that are not consolidated. These Trust Securities are mandatorily redeemable preferred security obligations of the Trusts. The sole assets of the Trusts generally are junior subordinated deferrable interest notes of the Corporation or its subsidiaries (the Notes). The Trusts generally are 100 percent-owned finance subsidiaries of the Corporation. Obligations associated with the Notes are included in the long-term debt table on page 219.
Certain of the Trust Securities were issued at a discount and may be redeemed prior to maturity at the option of the Corporation. The Trusts generally have invested the proceeds of such Trust Securities in the Notes. Each issue of the Notes has an interest rate equal to the corresponding Trust Securities distribution rate. The Corporation has the right to defer payment of interest on the Notes at any time or from time to time for a period not exceeding five years provided that no extension period may extend beyond the stated maturity of the relevant Notes. During any such extension period, distributions on the Trust Securities will also be deferred and the Corporation’s ability to pay dividends on its common and preferred stock will be restricted.
The Trust Securities generally are subject to mandatory redemption upon repayment of the related Notes at their stated maturity dates or their earlier redemption at a redemption price equal to their liquidation amount plus accrued distributions to the date fixed for redemption and the premium, if any, paid by the Corporation upon concurrent repayment of the related Notes.
Periodic cash payments and payments upon liquidation or redemption with respect to Trust Securities are guaranteed by the Corporation or its subsidiaries to the extent of funds held by the Trusts (the Preferred Securities Guarantee). The Preferred Securities Guarantee, when taken together with the Corporation’s other obligations including its obligations under the Notes, generally will constitute a full and unconditional guarantee, on a subordinated basis, by the Corporation of payments due on the Trust Securities.
In 2013, the Corporation entered into various agreements with certain Trust Securities holders pursuant to which the Corporation paid $933 million in cash in exchange for $934 million aggregate liquidation amount of previously issued Trust Securities. Upon the exchange, the Corporation immediately surrendered the Trust Securities to the unconsolidated Trusts for cancellation, resulting in the cancellation of an equal amount of junior subordinated notes that had a carrying value of $934 million, resulting in an insignificant gain.
In 2012, as described in Note 13 – Shareholders’ Equity, the Corporation entered into separate agreements with certain Trust Securities holders pursuant to which the Corporation issued 19 million shares of common stock valued at $159 million and paid $9.4 billion in cash in exchange for $9.8 billion aggregate liquidation amount of previously issued Trust Securities. Upon the exchange, the Corporation immediately surrendered the Trust Securities to the unconsolidated Trusts for cancellation, resulting in the cancellation of an equal amount of junior subordinated notes that had a carrying value of $9.9 billion, resulting in a gain on extinguishment of debt of $282 million.
During 2012, the Corporation remarketed the remaining outstanding $141 million in aggregate principal amount of its BAC Capital Trust XIII Floating-Rate Preferred Hybrid Income Term Securities (HITS) and the remaining outstanding $493 million in aggregate principal amount of its BAC Capital Trust XIV Fixed-to-Floating Rate Preferred HITS. The Corporation repurchased and retired all of the remarketable notes in the remarketings. The net proceeds from the remarketing of the BAC Capital Trust XIII Floating-Rate Preferred HITS were used to satisfy the obligations of Trust XIII under a stock purchase contract agreement, pursuant to which Trust XIII was obligated to purchase, and the Corporation was obligated to sell, 1,409 shares of the Corporation’s Series F Floating Rate Non-Cumulative Preferred Stock (Series F Preferred Stock). The net proceeds from the remarketing of the BAC Capital Trust XIV Fixed-to-Floating Rate Preferred HITS were used to satisfy the obligations of Trust XIV under a stock purchase contract agreement, pursuant to which Trust XIV was obligated to purchase, and the Corporation was obligated to sell, 4,926 shares of the Corporation’s Series G Adjustable Rate Non-Cumulative Preferred Stock (Series G Preferred Stock). Following the remarketing of the notes and the subsequent purchase of the Corporation’s preferred stock under the stock purchase contracts, the preferred stock constitutes the sole asset of the applicable trust.
On May 25, 2012, the Corporation completed the repurchase of $134 million aggregate liquidation amount of capital securities of BAC Capital Trust VI, pursuant to a previously announced tender offer for such securities, and the related cancellation and retirement of the underlying 5.625% Junior Subordinated Notes, due 2035 of the Corporation issued to and held by BAC Capital Trust VI. As a result of this repurchase of capital securities and the related cancellation and retirement of the underlying 5.625% Junior Subordinated Notes, the series of covered debt benefiting from the Corporation’s replacement capital covenant, executed February 16, 2007 in connection with the issuance by BAC Capital Trust XIV of its 5.63% Fixed-to-Floating Rate Preferred Hybrid Income Term Securities (the Replacement Capital Covenant), was redesignated. Effective as of May 25, 2012, the 5.625% Junior Subordinated Notes ceased being the covered debt under the Replacement Capital Covenant. Also effective as of May 25, 2012, the Corporation’s 6.875% Junior Subordinated Notes, due 2055 underlying the capital securities of BAC Capital Trust XII, became the covered debt with respect to and in accordance with the terms of the Replacement Capital Covenant.
The Trust Securities Summary table details the outstanding Trust Securities and the related Notes previously issued which remained outstanding at December 31, 2013. For more information on Trust Securities for regulatory capital purposes, see Note 16 – Regulatory Requirements and Restrictions.
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Trust Securities Summary | | | | | | | | |
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(Dollars in millions) | | | December 31, 2013 | | | | | | |
Issuer | Issuance Date | | Aggregate
Principal
Amount of Trust Securities | | Aggregate
Principal
Amount of the Notes | Stated Maturity of the Trust Securities | Per Annum Interest Rate of the Notes | | Interest Payment Dates | | Redemption Period |
Bank of America | | | |
| | |
| | |
| | | | |
Capital Trust VI | March 2005 | | $ | 36 |
| | $ | 37 |
| March 2035 | 5.63 | % | | Semi-Annual | | Any time |
Capital Trust VII (1) | August 2005 | | 7 |
| | 7 |
| August 2035 | 5.25 |
| | Semi-Annual | | Any time |
Capital Trust VIII | August 2005 | | 524 |
| | 540 |
| August 2035 | 6.00 |
| | Quarterly | | On or after 8/25/10 |
Capital Trust XI | May 2006 | | 658 |
| | 678 |
| May 2036 | 6.63 |
| | Semi-Annual | | Any time |
Capital Trust XV | May 2007 | | 2 |
| | 2 |
| June 2056 | 3-mo. LIBOR +80 bps |
| | Quarterly | | On or after 6/01/37 |
NationsBank | | | |
| | |
| | |
| | | | |
Capital Trust III | February 1997 | | 131 |
| | 136 |
| January 2027 | 3-mo. LIBOR +55 bps |
| | Quarterly | | On or after 1/15/07 |
BankAmerica | | | |
| | |
| | |
| | | | |
Capital III | January 1997 | | 103 |
| | 106 |
| January 2027 | 3-mo. LIBOR +57 bps |
| | Quarterly | | On or after 1/15/02 |
Barnett | | | |
| | |
| | |
| | | | |
Capital III | January 1997 | | 64 |
| | 66 |
| February 2027 | 3-mo. LIBOR +62.5 bps |
| | Quarterly | | On or after 2/01/07 |
Fleet | | | |
| | |
| | |
| | | | |
Capital Trust V | December 1998 | | 79 |
| | 82 |
| December 2028 | 3-mo. LIBOR +100 bps |
| | Quarterly | | On or after 12/18/03 |
BankBoston | | | |
| | |
| | |
| | | | |
Capital Trust III | June 1997 | | 53 |
| | 55 |
| June 2027 | 3-mo. LIBOR +75 bps |
| | Quarterly | | On or after 6/15/07 |
Capital Trust IV | June 1998 | | 102 |
| | 106 |
| June 2028 | 3-mo. LIBOR +60 bps |
| | Quarterly | | On or after 6/08/03 |
MBNA | | | |
| | |
| | |
| | | | |
Capital Trust B | January 1997 | | 70 |
| | 73 |
| February 2027 | 3-mo. LIBOR +80 bps |
| | Quarterly | | On or after 2/01/07 |
Countrywide | | | |
| | |
| | |
| | | | |
Capital III | June 1997 | | 200 |
| | 206 |
| June 2027 | 8.05 |
| | Semi-Annual | | Only under special event |
Capital IV | April 2003 | | 500 |
| | 515 |
| April 2033 | 6.75 |
| | Quarterly | | On or after 4/11/08 |
Capital V | November 2006 | | 1,495 |
| | 1,496 |
| November 2036 | 7.00 |
| | Quarterly | | On or after 11/01/11 |
Merrill Lynch | | | |
| | |
| | |
| | | | |
Preferred Capital Trust III | January 1998 | | 750 |
| | 901 |
| Perpetual | 7.00 |
| | Quarterly | | On or after 3/08 |
Preferred Capital Trust IV | June 1998 | | 400 |
| | 480 |
| Perpetual | 7.12 |
| | Quarterly | | On or after 6/08 |
Preferred Capital Trust V | November 1998 | | 850 |
| | 1,021 |
| Perpetual | 7.28 |
| | Quarterly | | On or after 9/08 |
Capital Trust I | December 2006 | | 1,050 |
| | 1,051 |
| December 2066 | 6.45 |
| | Quarterly | | On or after 12/11 |
Capital Trust II | May 2007 | | 950 |
| | 951 |
| June 2067 | 6.45 |
| | Quarterly | | On or after 6/12 |
Capital Trust III | August 2007 | | 750 |
| | 751 |
| September 2067 | 7.375 |
| | Quarterly | | On or after 9/12 |
Total | | | $ | 8,774 |
| | $ | 9,260 |
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(1) | Notes are denominated in British Pound. Presentation currency is U.S. Dollar. |
