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Posted: 11:44 a.m. Friday, March 15, 2013
By Jim Bradley
CHARLOTTE, N.C. —
After years of negative headlines, Bank of America and its stock are riding the coattails of some good news. "It means better things for Charlotte. It means things are improving and getting better," said banking expert Tony Plath. Plath is talking about Bank of America's passing grade on a new government test of its financial strength and the bank's subsequent decision to reward stockholders. Bank of America announced it's buying back $5 billion worth of stock, equivalent to nearly 4 percent of the company. Taking that stock out of circulation means people owning the remaining shares get a bigger piece of the pie. "If you divide it by a fewer number of shares, the price goes up," said financial planner Bob Higgins. That doesn't mean Bank of America's troubles are over. It still faces potential losses in the billions from lawsuits over bad mortgages. Higgins believes the bank is moving forward. "The stock buyback is a nice intermediate step to rebuilding investor confidence without over-committing," Higgins said. Still, Bank of America chose not to request an increase in the dividend it pays shareholders. Experts said that would build confidence even more. "What the end-of-the-day question is going to be is when do they begin to restore profitability in a sustainable way so they can pay an increased dividend?" Plath said.
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