BofA Selling Stock, Cutting Dividend (Update)

Updated from 4:44 p.m. EDT

Bank of America (BAC Quote) said Monday it's cutting its quarterly dividend in half and aiming to raise $10 billion in order to shore up its capital base.

The announcement came as the company revealed its quarterly earnings roughly two weeks before it was scheduled to do so. Charlotte-based Bank of America said it earned $1.18 billion, or 15 cents a share, in the third quarter, down from $3.70 billion and 82 cents a share in the same period a year earlier.

As for its capital plans, the bank said it's targeting a Tier 1 capital ratio of 8%. To achieve that, the company plans to sell up to $10 billion of common stock and slash its dividend to 32 cents a share from 64 cents.

The dividend will be paid on Dec. 26 to shareholders of record Dec. 5. Calculated using the current number of shares outstanding, the reduction would add more than $1.4 billion to each quarter's capital.

"These are the most difficult times for financial institutions that I have experienced in my 39 years in banking," said Kenneth Lewis, chairman and chief executive of Bank of America, in a press release. "We believe it is prudent to raise capital to very substantial levels in this uncertain environment. Both economic and financial market conditions have changed significantly in the last two months. We were willing to operate at capital levels over the short-term that were good, but not at our targeted levels, given projections two months ago."

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