Bank of America's rocky road over the past few years has centered on mortgage loan repurchase demands from investors, for mortgage-backed securities issued before 2008. The company said on Jan. 18 that mortgage putback claims totaled $28.3 billion as of Dec. 31, however, the bank's settlement with Fannie Mae in early January lowered the repurchase claims by about $12.2 billion.
The next major event for Bank of America investors is likely to be the Federal Reserve's completion of its annual stress tests for the nation's largest banks on March 14. With Bank of America reporting a Dec. 31 Basel III Tier 1 common equity ratio of 9.25%, the company has exceeded the capital requirement under the Federal Reserve's proposed capital rules, that won't be completely phased-in until January 2019. That's why Mosby estimates the company will receive approval to raise its quarterly dividend to $0.05 a share from the current nominal payout of $0.01.
Mosby on Feb. 5 was careful to say in his report that his dividend estimates were "based on the assumption that we believe it is in management's best interest to use all of their excess capital to increase their dividends instead of repurchasing shares," so investors could see the bank choose a smaller dividend increase, along with some share buybacks.
Oppenheimer analyst Chris Kotowski on Feb. 4 said that he would "counsel investors to have guarded expectations, particularly as it relates to BAC,
Interested in more on Bank of America? See TheStreet Ratings' report card for this stock.
Email. Follow @PhilipvanDoorn
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- 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 + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV