Bank Watch

Bank of America stock trading at 2012 levels

Bank of America’s shares traded Thursday at levels not seen in four years, as bank stocks worldwide continue to face a tumultuous start to the year.
Bank of America’s shares traded Thursday at levels not seen in four years, as bank stocks worldwide continue to face a tumultuous start to the year. AP

Bank of America’s shares traded Thursday at levels not seen in more than three years, as bank stocks worldwide continued to take a battering in 2016.

Shares of the Charlotte-based bank fell to a 52-week low of $10.99 in midafternoon trading. The last time its shares traded that low was December 2012. Its shares closed Thursday at $11.16.

The decline came as U.S. stocks fell for the fourth day in a row as concerns about global economic weakness intensified, even as Federal Reserve Chair Janet Yellen reiterated her confidence in the U.S. economy.

The Dow Jones industrial average fell 254 points, or 1.6 percent, to close at 15,660. The Standard & Poor’s 500 index fell 22 points, or 1.2 percent, to 1,829. The Nasdaq composite fell 16 points, or 0.4 percent, to 4,266.

Crashing oil prices and concerns about global economic health have weighed heavily on U.S. bank stocks this year, according to analysts. European bank stocks have also been pummeled, with new worries about profitability hitting their shares on Thursday.

Shares at Bank of America are down about 34 percent this year, more than the bank’s biggest peers. Citigroup has fallen 32 percent, JPMorgan Chase 19 percent and Wells Fargo 17 percent. The KBW Bank Index, which tracks 24 banks, has slumped 23 percent.

Joe Morford, an analyst at RBC Capital Markets, said Bank of America is often a go-to bank for investors looking to flee the financial sector. Its stock is also seen as a “pure play” reflection of the U.S. economy, he said.

“People are wanting out of financials, out of bank stocks, and (Bank of America) is a big, liquid name,” Morford said.

Analysts also attribute Bank of America’s slide to uncertainty about the future pace of interest rate increases by the Federal Reserve. Bank of America is expected to benefit more than some of its peers as rates rise. But worries about the global and U.S. economy raise questions about when the Fed will make its next rate move.

During testimony to Congress this week, Yellen listed various risks to the U.S. economy, including declines in stock prices and higher borrowing rates for riskier borrowers.

“Financial conditions in the United States have recently become less supportive of growth,” she said.

Plummeting oil prices are hammering banks, whose recent earnings have taken a hit as the lenders set aside more money to cover potential losses on energy loans. Oil prices on Thursday sunk to their lowest levels since 2003 amid rising U.S. stockpiles, stoking concerns about broader economic impacts.

A Bank of America spokesman declined to comment. But the bank has previously noted improvement in tangible book value per common share, a measurement that reflects what investors would receive if the company went bankrupt and was liquidated. The metric rose to $15.62 at the end of last year, a record level and an 8 percent increase from a year earlier.

At Thursday’s close of $11.16, the shares are now trading at about 71 percent of their tangible book value.

Bank of America’s last big stock price dive took place over the course of 2011, a year in which concerns about sovereign defaults in Europe and the global economy dragged down shares of financial institutions. As the shares fell under $7, investor Warren Buffett swooped in that August with a $5 billion investment that was a much-needed show of confidence in the bank.

This year’s decline in the bank’s stock price comes as CEO Brian Moynihan already faces pressure to improve performance for investors. The bank’s stock price remains far below the level it traded at before the last recession began in December 2007, and its quarterly dividend sits at a mere 5 cents per share.

In December, Moynihan told the Observer he was not satisfied with the bank’s share price – then above $17. Citigroup’s stock price also has never recovered to pre-recession levels, although JPMorgan’s and Wells Fargo’s have.

The Associated Press contributed.

Deon Roberts: 704-358-5248, @DeonERoberts