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: Financial Winner

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, [Citigroup (C) and CIT Group (CIT)]," for a return of capital to investors. "While all three companies have high and rising capital ratios, the industry's recent history suggests that the banks get let out of the penalty box only very slowly," he wrote.

Following the completion of the stress tests, Kotowski expects Bank of America to be approved to raise its quarterly dividend to $0.03, with Citigroup raising its quarterly dividend to $0.10 from $0.01, and CIT Group initiating a quarterly dividend of $0.31.

BAC ChartBAC data by YCharts

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

RELATED STORIES:








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

>Contact by Email.

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.
2 of 2

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 16,960.57 -123.23 -0.72%
S&P 500 1,978.34 -9.64 -0.48%
NASDAQ 4,449.5640 -22.5440 -0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

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