Bank of America Corp., which serves more than half the U.S. households and millions of businesses – many of them in Connecticut – has enough cash to finance operations for more than two years, the chief financial officer said today.
“Market turmoil has created lingering industrywide concerns that magnify the importance of maintaining an extra level of capital to support business activities,” Joe Price said in an employee question and answer dialogue posted on the company’s Intranet site.
He added, “We currently have enough cash on hand to fund our parent company operations for more than two years without having to issue additional debt during that time.”
Price went on to say Bank of America believes it has the best deposit franchise in the world, which is a “very cost-effective funding source,” and that the company’s liquidity “continues to be strong despite the difficult market environment.”
The comments came as Bank of America shares fell in early trading today.
At 11 a.m., its shares traded at $5.70, down 17 cents, or 2.9 percent. Bank of America shares traded at a 25-year low – or $3.77 – last week.
“The stock price is a daily indicator of current market sentiment and should not be confused with the capital or liquidity that we use to fund our operations, make loans or otherwise invest in revenue-generating activity,” Price said in the posting.
The company’s Tier-1 ratio — the measure commonly used to rate a bank’s strength — was 9.15 percent at Dec. 31, well in excess of what regulators regard as well-capitalized.
But broad concerns remain regarding the health of the nation’s banks, as the U.S. banking system faces the worst financial crisis since the Great Depression. (AP)
