Bank Stocks — Bank of America (BAC)
Click to EnlargeAfter reporting weaker-than-expected earnings back on April 16, due largely to legal expenses related to housing bubble no-nos, Bank of America (BAC) is coming under new attack from the sellers this week after it was revealed that the bank’s capital plan to regulators was full of errors. Specifically, there were errors in the valuation of bond securities absorbed during the acquisition of Merrill Lynch back in 2009.
The end result is that BAC’s tier-one capital ratio was reduced to 11.9%, down 21 basis points. That may not seem like much, but the Federal Reserve is forcing the company to suspend its previously announced capital return actions, including a $4 billion stock buyback and a planned increased to its dividend.
As a result, BAC stock has fallen below its 200-day moving average for the first time since 2012 — with more downside extension likely.