SOURCE: The Bedford Report

The Bedford Report

February 01, 2011 08:46 ET

Are the Major Banks "Safe" Investments?

The Bedford Report Provides Analyst Research on Bank of America & Wells Fargo

NEW YORK, NY--(Marketwire - February 1, 2011) - Banks deemed "too big to fail" have garnered significant attention already in 2011. Once again investors are looking to banks as "safe" companies that will post steady profits and hopefully begin providing steady dividends. While certain major banks have said dividend increases are a top priority, others explained there is still too much uncertainty in the sector to return cash to shareholders. The Bedford Report examines the outlook for companies in the Major Banking Industry and provides research reports on Bank of America Corporation (NYSE: BAC) and Wells Fargo & Company (NYSE: WFC). Access to the full company reports can be found at:

Last month Bank of America CEO Brian Moynihan said that he expects the company will be in a position to "modestly" raise its dividend in the second half of 2011. Raising dividends is not as easy for financials as it is in other sectors. Bank regulators must approve any dividend increase by big banks that are undergoing stress tests. In November Federal Reserve issued guidelines that banks could issue dividends if they could meet capital requirements and have made their required payments under the Troubled Asset Relief Program.

Banks will also have to adhere to a new set of capital standards known as Basel III, if they hope to increase dividends. According to the Basel Committee on Banking Supervision, Basel III will set a tougher standard for the quality of capital as well as the assessment of risks on a bank's balance sheet. According to the proposals under Basel III, only if a bank operating in a steady economic environment maintains a Tier 1 capital ratio of 12% would it be allowed to pay or increase common dividends.

The Bedford Report releases regular market updates on the Major Banking Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at and get exclusive access to our numerous analyst reports and industry newsletters.

Wells Fargo says that its capital reserves are strong enough to meet the expected guidelines, and its CFO Howard Atkins said during a conference call last month that the bank is "eager to increase" its dividend and would like to eventually return to a 30 percent payout ratio for investors.

Last month Wells Fargo reported fiscal fourth quarter net income of $3.41 billion, or 61 cents per share, compared with $2.82 billion, or 8 cents per share, in the year-ago period.

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