This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Bank of America Kicks Off Shareholder Dilution (Update 1)

Bank of America article updated with dividend announcement and reference to recent layoff announcements.

NEW YORK (TheStreet) -- Bank of America (BAC) said it has issued $2.1 billion worth of common stock and senior debt in exchange for preferred stock and trust preferred securities worth $2.7 billion.

In a filing on Thursday evening, the bank said it had issued more than 185 million common shares, raising about $1.1 billion as of Thursday's close. It also issued $998.1 million of senior notes.

In exchange, the bank will receive preferred shares worth $590.4 million and Trust Preferred Stock with a liquidation preference of $ 2.1 billion. The exchange is expected to settle on or before November 23.

The exchange will result in an increase of $1.88 billion in Tier 1 Capital, an improvement of 14 basis points to the Tier 1 Common Capital ratio.

The bank had previously announced that it intended to issue upto 400 million common shares and $3 billion in senior notes to effectively replace roughly $6 billion of higher cost preferred stock and trust preferred securities, in order to take advantage of current market conditions where the market values of Bank of America's debt and preferred shares are trading below par.

The move is expected to save the bank interest and dividend and boost capital, but will dilute common shareholders.

Bank of America also announced a quarterly cash dividend on common stock of a penny per share, payable on Dec. 23 to shareholders of record as of Dec. 2.

The bank also declared a quarterly dividend of $1.75 per share on the 7 percent Cumulative Redeemable Preferred Stock, Series B payable on Jan. 25, 2012 to shareholders of record on Jan 11.

Bank of America confirmed Friday it had begun layoffs, part of a plan previously announced by CEO Brian Moynihan to eliminate 30,000 jobs at the bank "over the next few years."

-- Written by Shanthi Bharatwaj from New York

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,882.89 -102.72 -0.60%
S&P 500 1,962.82 -10.01 -0.51%
NASDAQ 4,391.8970 -27.1370 -0.61%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs