Bank of America: Capital Improvements but No Dividend?

[Stocks-to-Watch]

The market clearly liked what Bank of America (BAC) was cooking this morning in its fourth quarter earnings report, as shares jumped more than 6% in pre-market trading. But the enthusiasm fizzled a bit throughout the day, and the stock closed just 2.4% higher as reaction became somewhat more mixed.

Investors were surprised by the company’s bullishness about its capital position. Bank of America raised its projection for its Tier 1 Common ratio under Basel III rules expectations to 7.25%-7.5% from 6.75%-7% by the end of 2012. That gave the market hope that the bank won’t have to raise more capital to cover potential losses from litigation and mortgage expsoure. But it wasn’t enough to convince CEO Brian Moynihan go to the Federal Reserve again and ask permission to raise the quarterly 1-cent dividend. Last year, the Fed denied the bank, a blow that didn’t help the stock price.



Original Article Source by Barrons.com