Bank of America Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Long-term Debt

Long-term Debt

12 Months Ended

Dec. 31, 2012

Long-term Debt, Unclassified [Abstract]

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, 2012 and 2011, and the related contractual rates and maturity dates as of December 31, 2012.




	December 31
(Dollars in millions)	2012		2011
Notes issued by Bank of America Corporation
Senior notes:
Fixed, with a weighted-average rate of 5.26%, ranging from 1.50% to 7.63%, due 2013 to 2043	$	79,575	$	95,199
Floating, with a weighted-average rate of 1.15%, ranging from 0.16% to 5.21%, due 2013 to 2041	13,439		28,064
Senior structured notes	21,936		18,920
Subordinated notes:
Fixed, with a weighted-average rate of 5.39%, ranging from 2.40% to 10.20%, due 2013 to 2038	14,787		24,509
Floating, with a weighted-average rate of 1.38%, ranging from 0.11% to 3.66%, due 2016 to 2019	449		704
Junior subordinated notes (related to trust preferred securities):
Fixed, with a weighted-average rate of 6.79%, ranging from 5.25% to 11.45%, due 2027 to 2036	3,186		12,859
Floating, with a weighted-average rate of 1.03%, ranging from 0.89% to 3.69%, due 2027 to 2056	567		1,165
Total notes issued by Bank of America Corporation	133,939		181,420
Notes issued by Merrill Lynch & Co., Inc. and subsidiaries
Senior notes:
Fixed, with a weighted-average rate of 5.79%, ranging from 1.63% to 15.00%, due 2013 to 2034	35,064		41,103
Floating, with a weighted-average rate of 0.67%, ranging from 0.12% to 5.06%, due 2013 to 2044	11,964		18,480
Senior structured notes	27,288		27,578
Subordinated notes:
Fixed, with a weighted-average rate of 5.98%, ranging from 2.61% to 8.13%, due 2016 to 2038	9,331		11,454
Floating, with a weighted-average rate of 0.89%, ranging from 0.73% to 2.88%, due 2017 to 2026	1,318		1,207
Junior subordinated notes (related to trust preferred securities):
Fixed, with a weighted-average rate of 6.91%, ranging from 6.45% to 7.38%, due 2017 to 2067	3,809		3,600
Other long-term debt	992		701
Total notes issued by Merrill Lynch & Co., Inc. and subsidiaries	89,766		104,123
Notes issued by Bank of America, N.A. and other subsidiaries
Senior notes:
Fixed, with a weighted-average rate of 7.00%, due 2014	178		164
Floating, with a weighted-average rate of 0.53%, ranging from 0.39% to 0.75%, due 2026 to 2051	2,686		8,029
Subordinated notes:
Fixed, with a weighted-average rate of 5.68%, ranging from 5.30% to 6.10%, due 2016 to 2036	5,230		5,273
Floating, with a weighted-average rate of 0.60%, ranging from 0.36% to 0.61%, due 2016 to 2019	1,401		1,401
Total notes issued by Bank of America, N.A. and other subsidiaries	9,495		14,867
Other debt
Senior structured notes	864		1,187
Subordinated notes	—		983
Advances from Federal Home Loan Banks:
Fixed, with a weighted-average rate of 4.87%, ranging from 0.01% to 7.72%, due 2013 to 2034	6,277		18,798
Other	988		1,833
Total other debt	8,129		22,801
Total long-term debt excluding consolidated VIEs	241,329		323,211
Long-term debt of consolidated VIEs	34,256		49,054
Total long-term debt	$	275,585	$	372,265

Bank of America Corporation, Merrill Lynch & Co., Inc. and subsidiaries, 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, 2012 and 2011, the amount of foreign currency-denominated debt translated into U.S. dollars included in total long-term debt was $95.3 billion and $117.0 billion. Foreign currency contracts may be used to convert certain foreign currency-denominated debt into U.S. dollars.

At December 31, 2012, long-term debt of consolidated VIEs in the table above included credit card, automobile, home equity and other VIEs of $22.3 billion, $713 million, $2.3 billion and $8.9 billion, respectively. Long-term debt of VIEs is collateralized by the assets of the VIEs. For more information, see Note 7 – Securitizations and Other Variable Interest Entities.

At December 31, 2012 and 2011, Bank of America Corporation had approximately $154.9 billion and $69.8 billion of authorized, but unissued corporate debt and other securities under its existing U.S. shelf registration statements. At December 31, 2012 and 2011, Bank of America, N.A. had approximately $65.5 billion and $62.4 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 $5.6 billion and $6.3 billion at December 31, 2012 and 2011. At both December 31, 2012 and 2011, Bank of America, N.A. had approximately $20.6 billion of authorized, but unissued mortgage notes under its $30.0 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 4.71 percent, 5.52 percent and 0.93 percent, respectively, at December 31, 2012 and 4.35 percent, 5.17 percent and 1.38 percent, respectively, at December 31, 2011. 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.

The weighted-average interest rate for debt, excluding senior structured notes, issued by Merrill Lynch & Co., Inc. and subsidiaries was 4.73 percent and 4.74 percent at December 31, 2012 and 2011. As of December 31, 2012, the Corporation has not assumed or guaranteed the $89.0 billion of long-term debt that was issued or guaranteed by Merrill Lynch & Co., Inc. or its subsidiaries prior to the acquisition of Merrill Lynch by the Corporation. All existing Merrill Lynch & Co., Inc. guarantees of securities issued by certain Merrill Lynch subsidiaries under various non-U.S. securities offering programs will remain in full force and effect as long as those securities are outstanding, and the Corporation has not assumed any of those prior Merrill Lynch & Co., Inc. guarantees or otherwise guaranteed such securities.

Certain senior structured notes are accounted for under the fair value option. For more information on these senior structured notes, see Note 22 – Fair Value Option.

The table below shows the carrying value for aggregate annual maturities of long-term debt at December 31, 2012.




Long-term Debt by Maturity

(Dollars in millions)	2013		2014		2015		2016		2017		Thereafter		Total
Bank of America Corporation	$	12,457	$	20,888	$	16,812	$	20,401	$	19,575	$	43,806	$	133,939
Merrill Lynch & Co., Inc. and subsidiaries	24,000		18,207		5,156		3,542		8,886		29,975		89,766
Bank of America, N.A. and other subsidiaries	62		1		—		1,095		6,472		1,865		9,495
Other debt	4,858		1,547		204		15		17		1,488		8,129
Total long-term debt excluding consolidated VIEs	41,377		40,643		22,172		25,053		34,950		77,134		241,329
Long-term debt of consolidated VIEs	13,820		8,734		1,460		2,091		1,815		6,336		34,256
Total long-term debt	$	55,197	$	49,377	$	23,632	$	27,144	$	36,765	$	83,470	$	275,585

Included in the above table are certain structured notes 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 above table as maturing at their earliest put or redemption date.

In 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 $12.4 billion and recorded net gains of $1.3 billion in connection with these transactions.

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 223.

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 2012, as described in Note 14 – Shareholders’ Equity, the Corporation entered into various 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.

In 2011, the Corporation issued 282 million shares of common stock valued at $1.6 billion and senior notes valued at $1.5 billion in exchange for $3.8 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 $4.3 billion, resulting in a gain on extinguishment of debt of $1.2 billion. In addition, the Corporation issued 26 million shares of common stock valued at $138 million and senior notes valued at $505 million in exchange for $917 million aggregate liquidation amount of HITS. Upon the exchange, the Corporation immediately surrendered the HITS to the unconsolidated Trusts for cancellation, resulting in the cancellation of an equal amount of junior subordinated notes that had a carrying value of $915 million, and the cancellation of a corresponding amount of the underlying stock purchase contract, resulting in a $12 million loss on extinguishment of debt and an increase to additional paid-in capital of $284 million.

The table below lists each series of Trust Securities or HITS, and the corresponding aggregate liquidation preference covered by the Exchange Agreements described in Note 14 – Shareholders’ Equity, and other redemption activity.




Negotiated Exchanges

	2012 Aggregate Liquidation Amount Exchanged		2011 Aggregate Liquidation Amount Exchanged		Total Aggregate Liquidation Amount Exchanged

(Dollars in millions)
HITS
Trust XIII	$	—	$	559	$	559
Trust XIV	—		358		358
Trust Securities
Bank of America Capital Trust I	574		1		575
Bank of America Capital Trust II	898		2		900
Bank of America Capital Trust III	499		1		500
Bank of America Capital Trust IV	367		8		375
Bank of America Capital Trust V	514		4		518
Bank of America Capital Trust VI	141		823		964
Bank of America Capital Trust VII ⁽¹⁾	212		1,114		1,326
Bank of America Capital Trust VIII	2		4		6
Bank of America Capital Trust X	891		9		900
Bank of America Capital Trust XI	144		198		342
Bank of America Capital Trust XII	863		—		863
Bank of America Capital Trust XV	50		446		496
NationsBank Capital Trust II	289		76		365
NationsBank Capital Trust III	98		269		367
NationsBank Capital Trust IV	427		73		500
BankAmerica Capital II	450		—		450
BankAmerica Capital III	68		226		294
BankAmerica Institutional Capital A	450		—		450
BankAmerica Institutional Capital B	300		—		300
Barnett Capital III	186		—		186
Fleet Capital Trust II	203		47		250
Fleet Capital Trust V	29		142		171
Fleet Capital Trust VIII	534		—		534
Fleet Capital Trust IX	175		—		175
BankBoston Capital Trust III	59		136		195
BankBoston Capital Trust IV	52		96		148
Progress Capital Trust I	9		—		9
Progress Capital Trust III	10		—		10
MBNA Capital Trust A	250		—		250
MBNA Capital Trust B	45		165		210
MBNA Capital Trust D	300		—		300
MBNA Capital Trust E	200		—		200
LaSalle Series I	455		—		455
LaSalle Series J	67		—		67
Total exchanged	$	9,811	$	4,757	$	14,568


⁽¹⁾	Notes were denominated in British Pound. Presentation currency is U.S. Dollar.

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, 2012, as originated by Bank of America Corporation and its predecessor companies and subsidiaries. For additional information on Trust Securities for regulatory capital purposes, see Note 17 – Regulatory Requirements and Restrictions.

Trust Securities Summary

(Dollars in millions)

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

March 2035

5.63

3/8,9/8

Any time

Capital Trust VII⁽¹⁾

August 2005

August 2035

5.25

2/10,8/10

Any time

Capital Trust VIII

August 2005

524

540

August 2035

6.00

2/25,5/25,8/25,11/25

On or after 8/25/10

Capital Trust XI

May 2006

658

678

May 2036

6.63

5/23,11/23

Any time

Capital Trust XV

May 2007

June 2056

3-mo. LIBOR +80 bps

3/1,6/1,9/1,12/1

On or after 6/01/37

NationsBank

Capital Trust III

February 1997

133

137

January 2027

3-mo. LIBOR +55 bps

1/15,4/15,7/15,10/15

On or after 1/15/07

BankAmerica

Capital III

January 1997

106

109

January 2027

3-mo. LIBOR +57 bps

1/15,4/15,7/15,10/15

On or after 1/15/02

Barnett

Capital III

January 1997

February 2027

3-mo. LIBOR +62.5 bps

2/1,5/1,8/1,11/1

On or after 2/01/07

Fleet

Capital Trust V

December 1998

December 2028

3-mo. LIBOR +100 bps

3/18,6/18,9/18,12/18

On or after 12/18/03

BankBoston

Capital Trust III

June 1997

June 2027

3-mo. LIBOR +75 bps

3/15,6/15,9/15,12/15

On or after 6/15/07

Capital Trust IV

June 1998

102

106

June 2028

3-mo. LIBOR +60 bps

3/8,6/8,9/8,12/8

On or after 6/08/03

Progress

Capital Trust II

July 2000

July 2030

11.45

1/19,7/19

On or after 7/19/10

Capital Trust IV

December 2002

January 2033

3-mo. LIBOR +335 bps

1/7,4/7,7/7,10/7

On or after 1/07/08

MBNA

Capital Trust B

January 1997

February 2027

3-mo. LIBOR +80 bps

2/1,5/1,8/1,11/1

On or after 2/01/07

ABN AMRO North America

Series I

May 2001

Perpetual

3-mo. LIBOR +275 bps

2/15,5/15,8/15,11/15

On or after 11/08/12

Series II

May 2001

Perpetual

3-mo. LIBOR +275 bps

3/15,6/15,9/15,12/15

On or after 11/08/12

Series III

May 2001

Perpetual

3-mo. LIBOR +275 bps

1/15,4/15,7/15,10/15

On or after 11/08/12

Series IV

May 2001

Perpetual

3-mo. LIBOR +275 bps

2/28,5/30,8/30,11/30

On or after 11/08/12

Series V

May 2001

Perpetual

3-mo. LIBOR +275 bps

3/30,6/30,9/30,12/30

On or after 11/08/12

Series VI

May 2001

Perpetual

3-mo. LIBOR +275 bps

1/30,4/30,7/30,10/30

On or after 11/08/12

Series VII

May 2001

Perpetual

3-mo. LIBOR +275 bps

3/15,6/15,9/15,12/15

On or after 11/08/12

Series IX

June 2001

Perpetual

3-mo. LIBOR +275 bps

3/5,6/5,9/5,12/5

On or after 11/08/12

Series X

June 2001

Perpetual

3-mo. LIBOR +275 bps

3/12,6/12,9/12,12/12

On or after 11/08/12

Series XI

June 2001

Perpetual

3-mo. LIBOR +275 bps

3/26,6/26,9/26,12/26

On or after 11/08/12

Series XII

June 2001

Perpetual

3-mo. LIBOR +275 bps

1/10,4/10,7/10,10/10

On or after 11/08/12

Series XIII

June 2001

Perpetual

3-mo. LIBOR +275 bps

1/24,4/24,7/24,10/24

On or after 11/08/12

LaSalle

Series I

August 2000

Perpetual

3-mo. LIBOR +105.5 bps

3/15,6/15,9/15,12/15

On or after 9/15/10

Series J

September 2000

Perpetual

3-mo. LIBOR +105.5 bps

3/15,6/15,9/15,12/15

On or after 9/15/10

Countrywide

Capital III

June 1997

200

206

June 2027

8.05

6/15,12/15

Only under special event

Capital IV

April 2003

500

515

April 2033

6.75

1/1,4/1,7/1,10/1

On or after 4/11/08

Capital V

November 2006

1,495

1,496

November 2036

7.00

2/1,5/1,8/1,11/1

On or after 11/01/11

Merrill Lynch

Preferred Capital Trust III

January 1998

750

901

Perpetual

7.00

3/30,6/30,9/30,12/30

On or after 3/08

Preferred Capital Trust IV

June 1998

400

480

Perpetual

7.12

3/30,6/30,9/30,12/30

On or after 6/08

Preferred Capital Trust V

November 1998

850

1,021

Perpetual

7.28

3/30,6/30,9/30,12/30

On or after 9/08

Capital Trust I

December 2006

1,050

1,051

December 2066

6.45

3/15,6/15,9/15,12/15

On or after 12/11

Capital Trust II

May 2007

950

951

June 2062

6.45

3/15,6/15,9/15,12/15

On or after 6/12

Capital Trust III

August 2007

750

751

September 2062

7.375

3/15,6/15,9/15,12/15

On or after 9/12

Total

9,709

10,194


⁽¹⁾	Notes were denominated in British Pound. Presentation currency is U.S. Dollar.