Why Bank of America Corp (BAC) Is Higher Amid Light Volume: U.S. Bancorp (USB), Citigroup Inc. (C)

Other than saying that a dividend increase is “on the table,” Bank of America Corp (NYSE:BAC)’s CEO Brian Moynihan has otherwise stayed quiet. His reticence in this regard is largely attributable to the public and humiliating denial of the bank’s request in 2011 — something many people believe has been his biggest mistake since taking over at the beginning of 2010.

That being said, Bank of America Corp (NYSE:BAC) stands a good chance of being able to increase its now-nominal quarterly payout of $0.01 per share. As I discussed here, for a bank to obtain approval, according to the Fed, it must demonstrate the “ability to maintain capital above each minimum regulatory capital ratio and above a tier 1 common ratio of 5 percent on a pro forma basis under expected and stressful conditions throughout the planning horizon.”

So, how does Bank of America Corp (NYSE:BAC) measure up? Pretty good I’d say. At the end of the third quarter, its tier 1 common capital ratio was an impressive 11.4%, or more than twice the requisite minimum. And even after the extreme scenarios envisioned by the stress test, it fell to only 6.8%, or 180 bps higher than 5% called for. With this in mind, while I’ve certainly been wrong before, it seems clear that Bank of America Corp (NYSE:BAC), at the very least, has a great shot of attaining approval this go-around. And it’s this feeling, in turn, that’s fueling the bank’s share price today.

The article Why Bank of America Is Higher Amid Light Volume originally appeared on Fool.com and is written by John Maxfield.

John Maxfield owns shares of Bank of America. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.

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