Tomahawk, WI 01/06/2014 (BasicsMedia) – Bank of America Corp (NYSE:BAC) continues to lose billions of dollars in settlements to bad mortgage it sold to investors. The company hopes to get all its legal troubles behind in about next 18 months. In order to completely deal with the legal challenges, the bank expects to incur about $9 billion in settlements. The question that investors have been asking is what these losses mean to their financial position in the stock.

Among the leading four U.S. lenders, Bank of America Corp (NYSE:BAC) has paid a lot for mortgage fiasco settlements. The company has also recovered a lot from the financial crisis of 2008. However, it still pays very little to investors in terms of dividend and even its stock price is lower than what it used to be before the financial crisis. It’s been a long struggle this far, however, investors can hope that as the bank pays for its supposed irregular mortgage dealings, it is clearing its path for the future.

As mentioned earlier, Bank of America Corp (NYSE:BAC) has registered the highest percentile stock recovery since financial crisis. Currently the bank’s balance sheet is completely shored up and it looks real that this time around it wound succeed in request to review its dividend upwards. Increasing dividend payout will be an important step towards return cash to investors.

The company is also expected to increase its shares buyback program to reduce the number of its outstanding shares. This will return a lot of cash to investors and also boost the price of the stock. However, high dividends and shares buyback cannot be attained if the company is still deep in the lawsuits. This is why the company’s management is keen on dealing with the legal issues first, to clear the way for focus on growth.


It is good to note that even in the midst of the ongoing legal challenges, Bank of America Corp (NYSE:BAC) has been seeking opportunities for its investors in various areas. The company is currently adding more customers while increasing investment in promising sectors and recoiling from those with lower margins. In particular, the bank is hoping that its wealth management unit will be the main driver of its growth in the coming months. For this reasons, the company is adding more customers in this segment will bringing talented funds managers to ensure that the goal is achieved.

The company is also exiting non-core assets with the best speed possible. Over the past year Bank of America Corp (NYSE:BAC) reduced its presence in commodity trade. It considers this low-margin market and thus not good for its shareholders.

Similarly, the bank is reducing its investment in government debts. This is generally something that most major financial institutions are doing as debts continue to lose their luster due to low interests.

The stock

The stock of Bank of America Corp (NYSE:BAC) is still trailing its peak prices before financial crisis. This means that those who invested in the stock before the financial crisis have suffered value loss. However, this low price offers an opportunity for investors wishing to initiate a position in the stock to get it before the price soars as it is expected.

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