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Bank of America: Capital Strength Winner

The Senate subcommittee report included a recommendation that federal regulators immediately implement the Volcker Rule, which is the ban on proprietary trading by banks included in the Dodd-Frank financial reform legislation. The Federal Reserve proposed rules to implement Volker in October 2011, inviting industry and public comment. The Regulator in April 2011 said that banks would be required to comply with the Volcker Rule by July 21, 2014, but the regulator still hasn't finalized the rule.

Bank of America

Bank of America on Thursday announced it had received Federal Reserve approval to repurchase up to $5.0 billion in common shares and redeem up to $5.5 billion in preferred shares, through the first quarter of 2014. The company didn't request Federal Reserve approval to increase its one-cent quarterly dividend on common shares.

When discussing the CCAR results in general, Guggenheim Securities analyst Marty Mosby said "First, it was obvious that the bank management teams, for the most part, were conservative with their capital distribution requests. Total payout ratios only increased from around 40% to about 55%. Most importantly, the median dividend yield coming out of this year's CCAR is 2.2%.

"This is the first time since the onset of the financial crisis and recent recession that the large cap banks have been able to reestablish a meaningful advantage to the S&P 500," he said.

Bank of America has been at the forefront of the industry's post-crisis cleanup and still has a long way to go in clearing out the mortgage repurchase claims resulting mainly from the company's purchase of Countrywide Financial in 2008.

According to Mosby, the surprisingly high level of capital deployment planned by Bank of America suggests that "patience when you get in the penalty box is rewarded by the Fed."

BAC Chart BAC data by YCharts

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

-- 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 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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