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

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,804.80 26.65 0.15%
Nasdaq 4,765.38 16.98 0.36%
S&P 500 2,070.65 9.42 0.46%
Treasuries 2.18 -0.03 -1.27%
Data as of 7:44am ET
Company Price Change % Change
Bank of America Corp... 17.62 0.09 0.51%
Apple Inc 111.78 -0.87 -0.77%
General Electric Co 25.62 0.48 1.91%
Intel Corp 36.37 -0.65 -1.76%
Microsoft Corp 47.66 0.14 0.29%
Data as of Dec 19

Sections

New York Magazine reporter Jessica Pressler, who has been caught up in controversy this past week, will not be moving on to a new job at Bloomberg News. More

Investors beware: These 5 global crises are likely to rattle the stock market and world economy. More

Forums in dark corners of the web sell the kinds of hacks that befell Sony. More

Unilever sued Hampton Creek over its egg-free mayonnaise spread Just Mayo. But the company behind Best Foods and Hellman's mayonnaise has now dropped the lawsuit. More

Retired union workers could see their pensions cut under a controversial new law, but many say they're not sure how they'll make ends meet if big cuts go through. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.