Bank of America shares fell below $10 for the first time since May 2009.
The stock price hit a low of $9.88 Friday, making it the only one of the four largest banks with a share price in the single digits. Most large bank stocks fell Friday on fears of the fallout of the European debt crisis and results of stress tests on the European banks' ability to withstand economic stress.
Investors have been bailing out of Bank of America stock for several months, driving the price. In the past 12 months, Bank of America Corp.' s stock has fallen 35 percent, making it the third worst performing stock in the Standard & Poor's 500 index. On Friday, the stock closed at $10, down 0.7 percent for the day.
The stock decline is a set-back for the nation's largest bank and its CEO Brian Moynihan, who has had to deal with multiple crises in the past year, mostly related to mortgage problems stemming from the bank's 2008 purchase of Countrywide Financial.
On June 29, Bank of America announced its latest settlement with investors who claim they were knowingly sold poorly written mortgage bonds. At $8.5 billion, it was the largest bank settlement ever announced. The amount eclipsed the last three years of earnings at the Charlotte, N.C., bank.
The stock also reflects investors' anxieties over how deep Bank of America's problems might be, said Cassandra Toroian, president and chief investment officer at Bell Rock Capital.
" (If) investors feel like there's no end to the losses and the settlements... why own it?" Toroian said.
The uncertainties are numerous. The latest settlement is already being challenged in court by one investor group and the New York attorney general is investigating how the deal was reached. Since the beginning of the year, the bank has agreed to pay $12.7 billion in settlements to multiple investors. The bank increased its litigation reserves by $940 million in the first quarter and is expected to add to that when it announces second quarter results next Tuesday. Experts say the move makes it clear company officials think there's more to come.
In March, the Federal Re-serve didn't allow Bank of America to increase its dividend, citing uncertainty about the depth of its mortgage problems. It was the only denial issued to any of the four largest U.S. banks. And it raised questions with investors about whether the bank was strong enough to withstand another economic downturn.
Bank of America is in worse shape than other major banks like JPMorgan Chase & Co. and Wells Fargo & Co. be-cause of its purchase of Countrywide for $4 billion in 2008. That seemed like a bargain price for the country's largest mortgage lender.
But the purchase has cost the bank tens of billions more in mortgage losses, regulatory fines, repurchases of poorly written loans and expensive litigation. All told, the bank services one out of every five U.S. mortgages.