Bank of America’s (NYSE: BAC) board of directors approved on Friday $713 million worth of preferred dividend payments on stock issued to the U.S. Treasury Department. The Treasury received the preferred shares in exchange for funds provided through the Troubled Asset Relief Fund (TARP).
The bank has paid the government $1.83 billion in TARP dividends for the year as of September 30.
Bank of America received a total of $45 billion TARP funds, beginning with an initial payment of $25 billion in the fall of 2008 when the government launched the program to support the liquidity of ailing Wall Street banks amidst the height of the credit crisis.
The preferred shares received by the government in exchange for TARP funds qualify for quarterly dividend payments. The current payment, which will be paid on November 16, is for the third quarter.
The $713 million payment is the combination of dividends on several classes of preferred shares.
Cash dividend payments of $312.50 a share are being made on the governments fixed rate cumulative perpetual preferred stock, Series N and the fixed rate cumulative perpetual preferred stock, Series Q. Total payments equal $188 million and $125 million, respectively.
A dividend payment of $500 a share for a total of approximately $400 million will be made on the fixed rate cumulative perpetual preferred stock, Series R.
Additionally, Bank of America has authorized dividend payments on various classes of its non-cumulative preferred shares, two of which were issued by Merrill Lynch.
Bank of America’s CEO Ken Lewis, who yesterday announced he would step down at year’s end, stated back on March 18 that the bank intends to repay TARP funds by the end of 2009 or early 2010. At the time Lewis said the bank was in a position to repay the funds if not for maintaining a higher than normal liquidity position.
