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Bank of America to focus on earnings first, dividend later

Bank of America wants to talk about earnings. Not dividends.

Investors have clamored for years for the Charlotte bank to increase its dividend, which has been stuck at a penny per share since the financial crisis. They didn’t get any promises on that Wednesday when Chief Financial Officer Bruce Thompson addressed a conference in New York.

Thompson wouldn’t say whether the bank would press for a dividend increase next year. He did say the primary focus was coming up with predictable earnings quarter after quarter.

“Like I said, I’m not going to get caught in a box on this one,” Thompson said after being asked twice about the bank’s plans.

“The key thing for us, without getting into dividend policy, is really getting to the point where we’re driving this predictable stream of recurring earnings so that we’re able to look at that dividend and move it up over time.”

Not answering the dividend question has been standard procedure for the past two years. Bank of America executives are regularly asked about their plans on the dividend, but haven’t telegraphed what they wanted to do since 2011. That year, CEO Brian Moynihan pledged to investors that they’d get a dividend increase -- only to have the plan rejected by the Federal Reserve.

Since the financial crisis, the nation’s largest banks have had to petition the Fed for permission to increase a dividend or buy back stock.

Bank of America did get permission to buy back $5 billion in common stock and to redeem $5.5 billion in preferred stock in its latest capital plan, which the Fed approved in March.

Meanwhile, Bank of America’s earnings have been unsteady. Large legal settlements have eaten into the bank’s profits over the past year and a half.

But Thompson said the bank’s standing looks better this time around. Though the capital plan process won’t really kick off until November, Thompson said the core earnings, capital ratios and legal risks to the company are in a better position than they were this time last year.

“We’re focused on making sure we can put our best foot forward as we go into 2014,” he said.

The New York conference came a day after the managers of the Dow Jones Industrial Average announced they were dropping Bank of America from the blue-chip list in favor of investment bank Goldman Sachs.

One investor said he was disappointed to hear that, and rattled off a list of reasons why he disagreed with the move. Bank of America is a more diversified company than Goldman, he said. And Goldman could be more volatile because of its reliance on the capital markets.

“If they were going to drop you, why didn’t they drop you few years ago when you had real problems?” he asked.

Thompson laughed. “That was very well said.”

Dunn: 704-358-5235 Twitter: @andrew_dunn
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