NEW YORK (TheStreet) -- Bank Of America (BAC) long investors feel robbed. The company announced Monday that it would suspend a previously announced $4 billion in stock repurchases and $0.01 dividend increase due to discovered issues with previously reported capital amounts.
$BAC: How does it get any worse for a shareholder than what BAC misdeeds have done to shareholders! Bad accounting??!!WTH!- Duke Alesen (@dadapupalesendarrell) Apr. 28 at 11:26 AM
The stock fell more than 5% to $15.15 by midday. Sentiment soured to 44% bearish, according to StockTwits' analytics.
$BAC Punishment at it's finest for corporate incompetence.- InvestingJungle (@InvestingJungle) Apr. 28 at 11:52 AM
The bad news also softened the sector. Banks weakened across the board. The Financial Sector SPDR (XLF) fell 0.71% by midday.
Bank of America said it incorrectly accounted for cumulative losses on Merrill Lynch structured notes, leading it to overstate capital amounts and ratios to regulators. The bank will resubmit its data and 2014 capital plan to the Federal Reserve Board.
Bank of America said the adjustments do not impact prior earnings statements. However, estimated tier 1 capital ratio was revised down 21 basis points to 11.9%. The total capital ratio was also revised down 21 basis points to 14.8%. Estimated tier 1 leverage ratio was revised to 7.4%, down 12 basis points, according to the press release.
Some investors said that the selloff would be short-lived. They argued that, even with the revisions, Bank of America is likely sufficiently capitalized to follow through with the previously announced share buyback plan and dividend raise.