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Bank of America: Stress Test Anticipation Winners

Stocks in this article: I:BKX

Bank of America managed to increase its Basel I Tier 1 common equity ratio to 11.06% as of Dec. 31, from 9.86% a year earlier, despite relatively weak 2012 earnings of $4.188 billion, or $0.25 a share. The company also estimated a Basel III Tier 1 common equity ratio of 9.25% as of Dec. 31, putting it in compliance with the Federal Reserve's proposed capital rules, six years ahead of the January 2019 deadline.

Bank of America currently pays a nominal quarterly dividend of $0.01 a share, and didn't request Federal Reserve approval for a dividend increase or any buybacks last year.

Credit Suisse analyst Moshe Orenbuch in a report on Wednesday said he expected all 17 large bank holding companies covered by his firm to "pass" the stress tests, and estimated that the group would increase its total capital return this year to 64% of earnings from 36% in 2012.

Credit Suisse estimates Bank of America will pay total dividends of $0.07 a share during 2013, while being approved for $753 million in share buybacks, for a total capital return of $1.559 billion.

BAC Chart BAC data by YCharts

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

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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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