Bank of America Corp
The bank had previously said it planned to sell shares next Monday, but because of strong demand, it is offering shares sooner.
CFO Joe Price also told investors on a conference call that the bank was seeing signs of credit stabilization and that managed losses on credit cards had plateaued.
Under a pact with U.S. regulators, the largest bank by assets will sell up to $18.8 billion in securities that will convert into common stock once shareholders approve an increase in its share count. The remainder of the $45 billion would be repaid with $26.2 billion in cash.
The bank also plans to sell $4 billion of assets as part of its plan to repay funds borrowed under the government's Troubled Asset Relief Program, Price said on the call. The bank is looking at assets to sell, and to the extent it does not shed assets, the bank will issue more shares.
Repaying the money gives the bank's search for a successor to Chief Executive Kenneth Lewis -- who will retire at the end of this year -- a boost. Returning the funds removes compensation restrictions that the bank, as a two-time recipient of TARP funds, has been under.
In testimony before a Senate Banking Committee hearing on Thursday, Federal Reserve Chairman Ben Bernanke said Bank of America repaying TARP funds is good news, adding that the real problems to the financial system have mostly been outside the bank holding companies.
But one top regulator cautioned that the government needs to be careful about letting big financial firms repay bailout money because there will not be more government support going forward. I think, in general, they need to be very careful with it, said Sheila Bair, chairman of bank regulator the Federal Deposit Insurance Corp.
The equity offering listed Bank of America-Merrill Lynch and UBS AG's
Bank of America shares were up 25 cents or 1.6 percent at $15.90 in afternoon trading on the New York Stock Exchange after earlier gaining as much as 6 percent.
More than 800,000 Bank of America option contracts had traded by early afternoon, double their average daily volume, according to options analytics firm Trade Alert. Some investors appeared to be taking profits on bullish call option positions, while others seemed to be implementing protective plays using put options, according to Interactive Brokers Group equity options analyst Caitlin Duffy.
The full repayment of TARP is an incremental positive in the sense that it relieves the intense regulatory and political scrutiny tied to its receipt of government money, Credit Suisse analyst Moshe Orenbuch wrote in a note to clients.
(Additional reporting by Juan Lagorio, Doris Frankel, Chuck Mikolajczak and Elinor Comlay, Editing by Tim Dobbyn and Gerald E. McCormick)