What is the main purpose of these exchange agreements?

The primary purpose of these exchange agreements is to strengthen Bank of America's capital base. By exchanging preferred stock and trust preferred securities for common stock and senior notes, the company aims to increase its Tier 1 common capital and improve its capital ratios, which is a key metric for financial institutions.

Why are these securities considered "unregistered"?

These securities are considered unregistered because they are being issued in reliance on an exemption from registration requirements under Section 3(a)(9) of the Securities Act of 1933. This exemption applies to securities that an issuer exchanges with its existing security holders, provided no commission or remuneration is paid for soliciting the exchange.

What is the impact on Bank of America's capital ratios?

Bank of America expects these exchanges, in conjunction with previous ones, to increase its Tier 1 common capital by approximately $2.90 billion and boost its Tier 1 common capital ratio by about 21 basis points under the Basel I framework. This is a significant improvement for regulatory capital requirements.

What types of securities were exchanged by Bank of America?

Bank of America exchanged existing preferred stock (with an aggregate liquidation preference of approximately $314 million) and trust preferred securities (with an aggregate liquidation preference of approximately $1.035 billion) for newly issued common stock and senior notes.

BANK OF AMERICA CORP /DE/ 8-K: Securities & Listing

Summary

This 8-K filing by Bank of America Corporation (BAC) on December 2, 2011, details significant unregistered sales of equity securities through a series of privately negotiated exchange agreements. The company exchanged approximately $314 million in preferred stock and $1.035 billion in trust preferred securities for newly issued common stock and senior notes. Specifically, BAC issued 125,528,595 shares of common stock, representing about 1.22% of its outstanding shares, and $442.3 million in aggregate principal amount of senior notes. These transactions are being conducted under the exemption provided by Section 3(a)(9) of the Securities Act of 1933, as the exchanges are directly between the issuer and existing security holders without third-party solicitation fees. The primary objective of these exchanges appears to be strengthening the company's capital position. BAC anticipates these transactions, when combined with prior exchanges detailed in a November 17, 2011 filing, will result in a total increase of approximately $2.90 billion in Tier 1 common capital and a 21 basis point improvement in its Tier 1 common capital ratio under Basel I. The exchanges are expected to settle by December 8, 2011. Investors should note that these are unregistered securities and the forward-looking statements within the report carry inherent risks and uncertainties.

Key Highlights

1Bank of America engaged in unregistered sales of equity securities through privately negotiated exchange agreements.
2BAC exchanged approximately $314 million in preferred stock and $1.035 billion in trust preferred securities.
3The company issued 125,528,595 shares of its common stock and $442.3 million in senior notes as part of these exchanges.
4The newly issued common stock represents approximately 1.22% of BAC's outstanding shares.
5These transactions are exempt from registration under Section 3(a)(9) of the Securities Act of 1933.
6The exchanges are expected to increase BAC's Tier 1 common capital by $2.90 billion and its Tier 1 common capital ratio by 21 basis points (Basel I), when combined with prior exchanges.
7Settlement for these exchanges is anticipated by December 8, 2011.

BANK OF AMERICA CORP /DE/ 8-K Report, Unregistered Securities Sale (Dec 2, 2011)

Summary

Key Highlights

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