Tuesday, October 7, 2008

Bank of America Hunkers Down

Citing "the most difficult times for financial institutions that I have experienced in my 39 years in banking", Kenneth D. Lewis, Chairman and CEO of Bank of America stated that the bank is aiming for an 8 percent Tier 1 capital ratio target.

Yesterday, B of A announced 3rd quarter earnings, along with initiatives to raise capital levels. With 3rd quarter net income dropping from $3.70 billion a year ago to $1.18 billion this year, the bank will be cutting its dividend and selling common stock to raise capital.

Despite the turbulence of the past two months, Bank of America gained $21 billion in retail deposits during the quarter as consumers moved money to safety (excluding the impact of the Countrywide acquisition). That gain was almost three times the industry average.

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