BANK OF AMERICA CORPORATION

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Delayed Nyse  -  04:00 2022-08-10 pm EDT
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Federal Reserve Releases Results Of Stress Tests And Large Bank Holding Companies Follow Up With Their Stress Capital Buffer Requirements

07/03/2022 | 10:23pm EDT

On June 23, the Federal Reserve Board issued the aggregate and individual results of the supervisory stress test (also known as the Dodd-Frank Act Stress Test or DFAST, as these tests are required by Section 165 of the Dodd-Frank Act), which assesses whether banks are sufficiently capitalized to absorb losses during a severe recession.

The Federal Reserve concluded that the 34 large banks that participated in the 2022 stress tests "have sufficient capital to absorb more than $600 billion in losses and continue lending to households and businesses under stressful conditions. In large part, this is due to the substantial buildup of capital since the 2007-09 financial crisis."

Following the DFAST results last week, many banks released their stress capital buffer ("SCB") requirements under the Comprehensive Capital Analysis and Review ("CCAR") on June 27 in various securities filings. The Federal Reserve is likely to publish all applicable banking organizations' SCBs in August. The SCB is driven by the DFAST results and is calculated by adding the maximum decline in each banking organization's common equity tier 1 ("CET1") ratio under the DFAST's severely adverse scenario plus four quarters of planned dividends. The minimum SCB is 2.5%. This is added to the 4.5% capital regulation minimum and any G-SIB surcharge or countercyclical capital buffer in place to show the total CET1 required.

Three banking organizations − Bank of America (SCB increase from 2.5% to approximately 3.5%), Citigroup (SCB increase from 3.0% to 4.0%), and JPMorgan Chase (SCB increase from 3.2% to 4.0%) − have announced the need to increase their stress capital buffers after the stress test results. Other institutions that don't have the need to increase their SCB could be likely to increase dividends or other capital distributions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mr Daniel Meade
Cadwalader, Wickersham & Taft LLP
200 Liberty Street New York
New York
NY 10281
UNITED STATES
Tel: 2125046000
Fax: 2125046666
E-mail: cwtinfo@cwt.com
URL: www.cadwalader.com

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Financials (USD)
Sales 2022 93 741 M - -
Net income 2022 26 364 M - -
Net Debt 2022 - - -
P/E ratio 2022 10,9x
Yield 2022 2,47%
Capitalization 282 B 282 B -
Capi. / Sales 2022 3,01x
Capi. / Sales 2023 2,76x
Nbr of Employees 210 000
Free-Float 99,9%
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Number of Analysts 27
Last Close Price 35,07 $
Average target price 42,25 $
Spread / Average Target 20,5%
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Managers and Directors
Brian T. Moynihan Chairman, President & Chief Executive Officer
Alastair Borthwick Chief Financial Officer
Catherine P. Bessant Vice Chairman-Global Strategy
Aditya Bhasin Chief Technology & Information Officer
Steve D. Boland Chief Administrative Officer
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