Why Bank of America Corp (BAC) Took Off Like a Rocket This Week: JPMorgan Chase & Co. (JPM), Goldman Sachs Group, Inc. (GS)

In a nutshell, the superbank comfortably passed the core stress test, coming through with a tier-one common-equity capital reserve, as measured against risk-weighted assets, of 6.8%. The minimum regulatory standard was 5%. Incredibly, B of A even beat JPMorgan Chase & Co. (NYSE:JPM) — that paragon of disciplined lending that emerged so strongly from the financial crisis — with its tier one common equity ratio of just 6.3%.

B of A also beat the pants off Goldman Sachs Group, Inc. (NYSE:GS) — another bank that is typically seen as perennially strong and resilient — but that only managed a tier-one common-equity ratio of 5.8%. Wells Fargo just edged B of A out — another bank everyone expects to perform brilliantly on stress tests — coming in at an even 7%.

But the big surprise may have been Citigroup , with its tier-one common-equity ratio of 8.3%. The bank was expected to do well — or at the very least, better than least year — and it did not disappoint.

Foolish bottom line
B of A currently pays a dividend of merely 0.3%. Investors would sure like to see a bit more than that coming their way after this year’s stress test results, or some share buybacks, and this week’s share-price performance indicates that’s exactly what they think might happen.

But investors will have to wait until next week to find out for sure: when the Fed’s second round of stress test announcements — those dealing with share-buyback and dividend plans — are made.

But always remember, Foolish investors, that you’re in this for the long haul. Whether its B of A or The Coca-Cola Company (NYSE: KO), your favorite stocks are going to spike and drop on a regular basis. But so long as the companies you’re invested in have strong fundamentals, and you still believe in their missions, your money is in the right place.

The article Why Bank of America Took Off Like a Rocket This Week originally appeared on Fool.com and is written by John Grgurich.

Fool contributor John Grgurich owns shares of Goldman Sachs and JPMorgan Chase. Follow John’s dispatches from the bleeding heart of capitalism on Twitter @TMFGrgurich.The Motley Fool recommends Goldman Sachs and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.

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