8-KOther Events

BANK OF AMERICA CORP /DE/ 8-K Report, Corporate Update (Mar 23, 2011)

Filed March 23, 2011For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

Bank of America Corporation (BAC) has disclosed its participation in the Federal Reserve's Comprehensive Capital Analysis and Review (CCAR) process. While the company had planned to maintain its common dividend and modestly increase it in the latter half of 2011, the Federal Reserve objected to the proposed increase. BAC intends to work with the Fed to resubmit a revised capital plan seeking permission for this modest dividend increase. The company also highlighted significant progress in strengthening its capital and liquidity positions over the past 12 months. This includes a substantial reduction in risk-weighted assets, growth in Tier 1 common equity and tangible common equity ratios, and a record increase in global excess liquidity, demonstrating a more robust financial foundation.

Key Highlights

  • 1Federal Reserve objected to Bank of America's proposed modest increase in common dividend for the second half of 2011.
  • 2Bank of America intends to resubmit a revised capital plan to seek approval for the dividend increase.
  • 3Risk-weighted assets were reduced by $108 billion in 2010.
  • 4Tier 1 common equity ratio increased to 8.6% at year-end 2010 from 7.1% at year-end 2009.
  • 5Tangible common equity ratio grew to 6.0% at year-end 2010 from 5.1% at year-end 2009.
  • 6Global excess liquidity reached a record $336 billion during 2010.
  • 7The company is focused on building its capital and liquidity positions.

Frequently Asked Questions

The filing does not specify the exact reasons for the Federal Reserve's objection to the proposed dividend increase. It only states that the Fed objected as part of the Comprehensive Capital Analysis and Review (CCAR) supervisory exercise, which assesses capital planning.

The company intends to resubmit a revised capital plan to the Federal Reserve to seek permission for a modest increase in its common dividend for the second half of 2011. The timeline for this is dependent on the Federal Reserve's review of the revised plan.

Over the 12 months leading up to year-end 2010, Bank of America reduced risk-weighted assets by $108 billion, grew its Tier 1 common equity ratio to 8.6% (up from 7.1%), and increased its tangible common equity ratio to 6.0% (up from 5.1%). Additionally, global excess liquidity rose to a record $336 billion.

The filing indicates that Tier 1 common equity ratio and Tangible common equity ratio are presented as non-GAAP measures. The company believes these provide additional clarity in assessing its results.