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Fifth Third: Financial Winner

Following the company's remarkable first-quarter run, shares of Bank of America (BAC - Get Report) rose 1% on Monday to close at $9.68.

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The shares have now returned 74% year-to-date, following last year's 58% plunge.

Bank of America is now trading for 0.8 times the company's reported Dec. 30 tangible book value of $12.95, and nine times the consensus 2013 EPS estimate of $1.06.

The company will report its first-quarter results on April 19, and the consensus among analysts is for the company to show a profit of 13 cents a share.

While Bank of America passed the Federal Reserve's 2012 stress tests with flying colors, the company didn't request permission to increase its dividend or buy back shares. Investors are likely facing an extended wait for a dividend increase, since Credit Suisse analyst Moshe Orenbach doesn't think the company will achieve full compliance with the Basel III capital requirements until late 2014.

The analyst on Monday estimated that Bank of America's Basel III Tier 1 common equity ratio would be 7.1% at the end of 2012, rising to 8.4% at the end of 2013.

Including a 7.00% Tier 1 common equity ratio requirement, plus an estimated 2.00% extra, as a "systemically important financial institution," Orenbuch said Bank of America will need a Tier 1 ratio of 9.00% to achieve full compliance, as the company "continues to optimize the balance [sheet], which has included sales of financial stakes, as well as sales of [mortgage servicing rights] and [risk-weighted assets] mitigation."

Interested in more on Bank of America? See TheStreet Ratings' report card for this stock.


-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

To follow the writer on Twitter, go to
Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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