Bank of America Shares Break Through a Big Ceiling
Things continue to look brighter for the beleaguered Bank of America Corp. (NYSE:BAC), as shares of the second-largest U.S. lender by assets, climbed past the $10 mark in New York trading for the first time since August. After a 58 percent decline in 2011, the Charlotte-North Carolina-based firm’s stock has rallied since the Federal Reserve announced on March 13 that all but four of the top 19 U.S. banks could survive a serious recession, Bloomberg reported.
Bank of America has gained around 18 percent since the Fed’s announcement. By not requesting permission to increase the 1-cent dividend, Chief Executive Officer Brian Moynihan was able to keep the minimum capital needed to satisfy Fed requirements for a hypothetical recession. Citigroup Inc. (NYSE:C) was the test’s biggest loser, because CEO Vikram Pandit asked to raise payouts.
In an effort to bolster capital, Moynihan, 52, sold $33 billion in assets last year. In the fourth quarter, the bank’s financial strength grew as Tier 1 common equity, a measure of its ability to cope with losses, climbed to 9.86 percent from 8.65 percent in the previous three-month period.
This year, Bank of America has rebounded by 81 percent as the U.S. economy shows evidence of improvement, easing worries of potential future loan losses. Bank of America declined last year due to concern that increasing mortgage expenses and the European debt crisis would drag down results.
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