BofA stock sale raises $12 billion

Bank of America Corp. said it raised $12 billion by selling preferred stock to investors in a deal that brought in twice as much as planned. The money will bolster capital depleted by acquisitions and a multibillion-dollar write-down on mortgage-related securities.

Half the stock carries an 8% annual dividend. The other half pays a 7.25% dividend and is convertible into Bank of America common shares at a ratio of $50 of preferred stock for each common share.

The $50-a-share conversion price is 25% above the common stock’s closing price Thursday of $39.90, up 77 cents on the day.

All of the preferred stock sold is perpetual, meaning it has no maturity date.

With the sale of stock, Bank of America said it expected its so-called Tier-1 capital ratio, which measures the company’s ability to cover losses, to approach management’s 8% target, up from 6.87% on Dec. 31. Regulators say a Tier-1 ratio of 6% reflects a well-capitalized bank.

Many banks have raised or announced plans to raise capital in the last two months to shore up their balance sheets as credit and capital market losses have mounted.

Bank of America, based in Charlotte, N.C., needed to rebuild capital after spending $24.3 billion to acquire U.S. Trust Corp. and LaSalle Bank last year and agreeing this month to buy Calabasas-based Countrywide Financial Corp. for $4 billion.

On Tuesday, Bank of America said its fourth-quarter profit plunged 95%, pushed down by loan losses and $5.28 billion in write-downs on complex securities known as collateralized debt obligations, which are often backed by mortgages.