Bank of America: Fiscal Cliff Crossed-Fingers Winner (Update 1)

Investors are also increasingly confident in a significant return of capital from Bank of America, as the company builds capital. The company reported Tier 1 common equity of $136.4 billion as of Sept. 30, increasing by $9.7 billion from the end of 2011. The estimated Basel III Tier 1 common equity ratio was 8.97% as of Sept. 30, meaning the company was just a hair under its fully phased-in Basel III minimum ratio, many years ahead of the Federal Reserve's requirement.

Atlantic Equities analyst Richard Staite on Dec. 13 said that he expected Bank of America to return about $6 billion in capital to investors during 2013 through stock buybacks and an increase to the quarterly dividend on common shares from its current nominal level of a penny.

The analyst estimated that by the end of 2013, Bank of America "will have $19bn in surplus capital and falling costs should have boosted earnings. We therefore forecast it will return $14bn in 2014 composed of a $4bn dividend and a $10bn buyback. This will put it on a par with [JPMorgan Chase (JPM)] where we forecast a $15bn capital return in 2014."

Staite rates Bank of America a "Buy," with a $12 price target.

BAC data by YCharts

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

RELATED STORIES:

Capital One: How I Beat the Best With a 37% Stock Rocket

Kass: The Stock Market Trading Jones

Financial Sector Seen Leading Fourth Quarter Earnings Growth

5 Small-Cap Bank Stock Plays for 2013 From Credit Suisse

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

>Contact by Email.

Follow @PhilipvanDoorn

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.

« First ‹ Previous 1 2 3