Bank of America Trading Near 52-Week High on Settlement with Federal Housing Finance Agency

Bank of America (NYSE:BAC) is trading higher after-hours after reporting that it has reached a settlement with the Federal Housing Finance Agency (FHFA) resolving four lawsuits FHFA filed against Bank of America, Countrywide, and Merrill Lynch entities beginning in September 2011, alleging they falsely represented that the underlying mortgage loans complied with certain standards.

Per the agreement, Bank of America (BAC) will make cash payments totaling approximately $6.3 billion to Fannie Mae and Freddie Mac. Bank of America will purchase certain RMBS at fair market value (approximately $3.2 billion). In return, FHFA’s pending lawsuits will be dismissed with prejudice and Bank of America and its affiliates will be released from all securities law and fraud claims, as well as certain other claims related to the private-label RMBS in dispute.

Separately, BAC also said it will increase its quarterly common stock dividend to $0.05 per share, beginning in Q2 2014. The board of directors has also authorized a new $4.0 billion common stock repurchase program. This authorization replaces the prior year’s common stock repurchase program that expires March 31, 2014.

In Other Banking News

BNY Mellon (NYSE:BK) says Wednesday the Federal Reserve did not object to its 2014 capital plan, so it will repurchase shares and lift its dividend.

BK plans to repurchase up to $1.74 billion of its common stock, starting in Q2 2014 and continuing through Q1 of 2015. The 2014 capital plan also included a 13% increase to BNY Mellon’s quarterly common stock dividend in Q2 2014, which the board of directors is expected to consider at its April meeting.

Shares of SunTrust Banks (NYSE:STI) are trading higher after-hours as the company said the Federal Reserve has completed its review of the company’s capital plan and approves an increase in the company’s quarterly common stock dividend to $0.20 from $0.10, beginning in Q2 2014; the repurchase of up to $450 million of the company’s outstanding common stock to be completed between Q2 2014 and Q1 2015; and maintaining dividend payments on the company’s preferred stock. These items are subject to approval by STI’s board of directors.

STI is up 1.4% at $39.58 after-hours, near the stock’s 52-week high of $41.26.