BofA shareholders vote to increase shares

CHARLOTTE, N.C. – Bank of America Corp. shareholders have voted to allow the bank to increase the number of common shares by more than a billion to repay the federal government bailout.
The move to increase the number of Bank of America (NYSE: BAC) shares from 10 billion to 11.3 was approved even though bank officials acknowledged that it would decrease the value of stock held by current shareholders.
Typically, when public companies offer more shares on the market, it reduces the ownership stake of each investor.
The shareholder approval means the “common equivalent securities” issued in December as part of the repayment of $45 billion in loans from the U.S. Treasury’s Troubled Asset Relief Program will convert to 1.286 billion shares of common stock.
The bank had raised $19 billion by issuing the “common equivalent securities” at $15 per share in December.
The bank said that about 80 percent of shares voted on the proposal. Of those, 76 percent voted in favor.
Brian Moynihan, Bank of America’s new CEO, attended a shareholders meeting in Charlotte last week to discuss the plan.
It was his first meeting with shareholders since taking over the top position. Moynihan said to the 54 shareholders in attendance that repaying the government loan was in the shareholders’ best interest, reported The Charlotte Observer.
If the bank were not allowed to issue the common shares, it would have continued paying exorbitant interest on the common equivalent securities, Moynihan said.
Bank of America Corp. (NYSE: BAC) is one of the world’s largest financial institutions. In the United States alone, it serves more than 59 million consumers and small businesses via more than 6,000 retail offices and 18,000 ATMs. To learn more, visit www.BankofAmerica.com.