Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Fed shoots down Bank of America dividend hike

By Annalyn Censky, staff reporter


NEW YORK (CNNMoney) -- Bank of America wanted to increase its dividend to shareholders in the second half of the year, but was shot down by the Federal Reserve last week, according to an SEC filing Wednesday.

The announcement came less than a week after the Fed said it had completed stress tests on the 19 biggest U.S. lenders and would give the green light for several to raise dividends and buy back shares.

JP Morgan Chase (JPM, Fortune 500), Wells Fargo (WFC, Fortune 500) and U.S. Bancorp (USB, Fortune 500) quickly announced dividend hikes.

But Bank of America (BAC, Fortune 500) apparently was not one of the banks that passed its stress tests with flying colors.

While neither the Federal Reserve nor the SEC filing cite specific concerns with Bank of America's balance sheet, analysts have been concerned with the bank's exposure to the housing market, following its acquisition of Countrywide in 2008.

Bank of America's quarterly dividend has been stuck at a penny since the meltdown of 2008. According to the SEC filing, the bank submitted a plan to the Fed in January, requesting to maintain its quarterly dividend in the first half of 2011 and then add a "modest increase" later in the year.

But the Fed notified Bank of America on Friday that it objected to the proposed increase.

Bank of America is allowed to submit a revised proposal and said it fully intends to try again.

Its stock fell 1.6% in pre-market trading Wednesday, following the news. To top of page

Index Last Change % Change
Dow 16,643.01 -11.76 -0.07%
Nasdaq 4,828.33 15.62 0.32%
S&P 500 1,988.87 1.21 0.06%
Treasuries 2.19 0.02 0.83%
Data as of 8:03pm ET
Company Price Change % Change
Freeport-McMoRan Inc... 10.50 0.31 3.04%
Bank of America Corp... 16.36 -0.08 -0.49%
Apple Inc 113.29 0.37 0.33%
Intel Corp 28.42 0.70 2.53%
Alcoa Inc 9.41 0.55 6.21%
Data as of Aug 28
Sponsors

Sections

Efforts to unionize low-wage employees of fast-food franchisees and outside contractors get lift from decision of NLRB. More

The U.S. economy has performed well this year. But there's lots of global gloom. Which will influence the Fed the most? More

The market volatility in China and the U.S. could hit private companies, especially late-stage unicorns. More

How do you run a successful crowdfunding campaign? Indiegogo's CEO Slava Rubin offers his top tips and mistakes to avoid. More

Looking for something good on Netflix? These entertaining films will help you learn more about finance and investing. More