Summary
Bank of America Corporation (BAC) announced on December 29, 2015, the redemption of all outstanding trust preferred securities issued by Merrill Lynch Preferred Capital Trust III, IV, and V. This redemption is scheduled to occur on January 29, 2016. The decision to redeem these securities stems from the purchase accounting adjustments related to BAC's acquisition of Merrill Lynch in 2009. As a direct consequence of this redemption, Bank of America will record a significant non-cash reduction to its net interest income and pretax income. The estimated amount of this reduction for the fourth quarter of 2015 is approximately $600 million. This represents the remaining discount to par value associated with these trust preferred securities that will be recognized upon their redemption.
Key Highlights
- 1Bank of America (BAC) to redeem all trust preferred securities from Merrill Lynch Preferred Capital Trusts III, IV, and V.
- 2Redemption date set for January 29, 2016.
- 3The redemption is a result of purchase accounting adjustments from the 2009 Merrill Lynch acquisition.
- 4Expectation of a non-cash reduction to net interest income.
- 5Anticipated non-cash reduction to pretax income of approximately $600 million in Q4 2015.
- 6The reduction relates to the remaining discount to par value of the redeemed securities.