BofA raises $13.5 billion by selling new shares
Bank of America Corp. is making progress filling the capital hole on its balance sheet.
The bank said Tuesday that it had raised $13.5 billion since May 8 by selling new shares to investors.
After conducting “stress tests” of 19 major banks, the government told 10 of them on May 7 that they needed to increase their capital levels. Bank of America was told it needed to find $34 billion in additional capital by November.
Bank of America Chief Executive Ken Lewis pledged to bridge the gap by issuing new common stock, converting private investors’ preferred stock into common shares, selling assets and boosting earnings.
Since the results of the stress tests were announced, Bank of America said, it has sold 1.25 billion shares at an average price of $10.77 a share.
The stock was unloaded via so-called at-the-market offerings, which entail continuously selling shares to investors during regular trading hours at or near prevailing market prices.
The extra supply in the market weighed on the price of the stock, which fell from $14.17 on May 8 to $11.25 on Tuesday, a 21% drop.
By contrast, the average big-bank stock slid 13% in the period.
Bank of America had 6.4 billion shares outstanding before the offering, so the newly issued shares diluted existing shareholders’ stakes by about 20%.
“We’re pleased to have this portion of our capital plan completed,” Chief Financial Officer Joe Price said in a statement.
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