Core Insights - Bank of America (BAC) plans to increase its quarterly common stock dividend by 7.7% to 28 cents per share starting in the third quarter of 2025 after passing the Federal Reserve's 2025 stress test [1][10] - All 22 banks tested in the stress test passed, with the scenario being less severe than the previous year [1] Financial Performance and Capital Deployment - The stress test modeled a 10% unemployment rate, a 33% drop in home prices, a 30% decline in commercial real estate prices, an 8% contraction in GDP, and a 50% equity market decline, resulting in aggregate simulated losses exceeding $550 billion [2] - BAC's preliminary stress capital buffer (SCB) is expected to improve by 70 basis points to 2.5%, with a CET1 minimum requirement of 10% effective October 1, 2025 [3] - If the Fed's proposed changes to the SCB calculation are adopted, BAC's SCB would be 2.7% and its CET1 minimum requirement would be 10.2% effective January 1, 2026 [3] - As of March 31, 2025, BAC had total debt of $721.9 billion and cash and cash equivalents of $273.6 billion, indicating a strong liquidity position [5] Dividend and Share Repurchase Plans - Following the 2024 stress test, BAC had previously increased its quarterly dividend by 8.3% to 26 cents per share, with a history of dividend increases over the past years [4] - BAC has a share repurchase plan with $14.4 billion remaining as of March 31, 2025, supporting continued capital returns to shareholders [10] Peer Comparison - JPMorgan (JPM) plans to increase its quarterly common stock dividend by 7.1% to $1.50 per share for the third quarter of 2025 and has authorized a $50 billion share repurchase program [6] - Morgan Stanley (MS) will increase its quarterly dividend from 92.5 cents to $1.00 and has reauthorized a multi-year share repurchase program of up to $20 billion [8] Valuation and Earnings Estimates - BAC shares have gained 9.6% year-to-date, compared to the industry's 18% growth [9] - BAC trades at a price-to-tangible book ratio of 1.82, below the industry average of 2.85 [12] - The Zacks Consensus Estimate for BAC's earnings indicates year-over-year growth rates of 11.9% for 2025 and 16.7% for 2026, with slight downward revisions in estimates over the past week [15]