8-KCorporate ChangesOther EventsExhibits & Filings

BANK OF AMERICA CORP /DE/ 8-K Report, Bylaw Amendment (Feb 24, 2010)

Filed February 24, 2010For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

Bank of America Corporation (BAC) filed an 8-K on February 24, 2010, detailing two significant corporate actions approved by stockholders. Firstly, the company amended its Certificate of Incorporation to increase the authorized common stock from 10 billion to 11.3 billion shares, signaling potential future equity issuances or stock-based compensation needs. Secondly, and perhaps more critically for the immediate shareholder base, the company announced the automatic conversion of all outstanding shares of its Series S Preferred Stock into common stock, effective February 24, 2010. This conversion involved approximately 1.286 billion shares of common stock, which originated from a complex financing structure involving "Common Equivalent Securities" issued in December 2009. The conversion of the Series S Preferred Stock effectively eliminates a class of preferred stock and converts it into common equity. This move simplifies the capital structure and could be viewed as a step towards strengthening the company's common equity base. Investors should note that the initial issuance of the Common Equivalent Securities included warrants that expired unexercised upon this conversion, indicating no additional dilution from those warrants. The increase in authorized shares, while not an immediate issuance, grants the company flexibility for future capital management strategies.

Key Highlights

  • 1Bank of America Corporation increased its authorized common stock from 10 billion to 11.3 billion shares, following stockholder approval.
  • 2The Series S Preferred Stock, issued in December 2009 as part of a $19.3 billion financing, automatically converted into common stock.
  • 3Approximately 1.286 billion shares of common stock were issued upon the conversion of the Series S Preferred Stock.
  • 4The conversion was effective on February 24, 2010, at 9:30 a.m.
  • 5Contingent Warrants associated with the original Common Equivalent Securities expired automatically and unexercised.
  • 6This filing formalizes actions approved by stockholders at a Special Meeting held on February 23, 2010.
  • 7The amendment to the Certificate of Incorporation was filed on February 23, 2010.

Frequently Asked Questions

Bank of America increased its authorized common stock from 10 billion to 11.3 billion shares to provide the company with greater flexibility for future capital needs, which could include stock issuances for acquisitions, debt repayment, or employee stock-based compensation plans.

All outstanding shares of the Series S Preferred Stock automatically converted into approximately 1.286 billion shares of Bank of America's common stock. This conversion was a pre-defined term of the preferred stock, which was originally part of a financing arrangement from December 2009.

The Common Equivalent Securities were a financial instrument issued in December 2009 that included a depositary share representing an interest in the Series S Preferred Stock and a warrant to purchase a fractional share of common stock. These warrants expired without becoming exercisable upon the conversion of the Series S Preferred Stock, meaning no additional common stock dilution occurred from these warrants.

The primary immediate impact is the conversion of preferred stock into common stock, which increases the total number of outstanding common shares. While this conversion itself does not necessarily represent new capital raised, it simplifies the company's capital structure. The increase in authorized shares gives management future flexibility but does not mean new shares are being issued at this moment.