Bank of America to Keep On Rising in 2013: Analyst

The analyst expects Bank of America's net interest margin to expand by 3 basis points during the fourth quarter, to 2.36%, which is, by far, his lowest estimated NIM among the nine large-cap banks. For 2013, Juneja expects Bank of America's margin to increase by one basis point, which may not seem like much, however, he expects a significant margin squeeze for most of the other large-cap banks, including a 23% decline for Wells Fargo, a 21% decline for PNC and a 20% decline for BB&T.

Most analysts expect the margin decline to be offset during 2013 by continued strong fee income from the mortgage refinancing wave, and a continued decline in credit costs as the economy continues to recover.

More Dividends Coming

Following the next round of Federal Reserve stress tests, Juneja expects all nine of the large-cap banks covered in the report to be approved to raise their dividends on common shares, with Bank of America going from the current nominal quarterly dividend of a penny a share to five cents a share in the second quarter of 2013, with the dividend increasing to even cents a share in the second quarter 2014.

Two other large-caps covered in the JPMorgan Report are currently paying quarterly dividends of just a penny a share. Juneja expects Citigroup to raise its quarterly payout to 25 cents a share in the second quarter of 2013, with the dividend increasing to 43 cents a share in 2013; and for Regions Financial (RF) to increase its dividend to a nickel in the second quarter of 2013, going to six cents in 2013.

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

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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 TheStreet.com 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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