Bank of America has sent the US Treasury $45 billion to repay the US taxpayers’ entire investment in it as part of the Troubled Asset Relief Program (TARP), following the completion of a securities offering. It also paid the government $190 million in accrued dividends on the repurchased preferred securities.

As previously announced, the bank sold 1.286 billion common equivalent securities, generating gross proceeds of approximately $19.29 billion. In repaying TARP, Bank of America repurchased all 600,000 shares of its fixed rate cumulative perpetual preferred stock, Series N, all 400,000 shares of its fixed rate cumulative perpetual preferred stock, Series Q and all 800,000 shares its fixed rate cumulative perpetual preferred stock, Series R.

The US Treasury continues to hold warrants to buy Bank of America common stock issued as part of the TARP investments. Following the completed securities offering, Bank of America would increase equity by approximately $3 billion through asset sales to be approved by the board of governors of the Federal Reserve and contracted for by June 30, 2010.

Bank of America also agreed to raise up to approximately $1.7 billion through the issuance of restricted stock in lieu of a portion of incentive cash compensation to certain Bank of America associates as part of their normal year-end incentive payments.

After the repayment of TARP funds and other initiatives, the banks tier 1 capital ratio would be 11%, pro forma based on the September 30, 2009 ratio of 12.5%. The tier 1 common capital ratio would be 8.4%, pro forma based on the September 30, 2009 ratio of 7.3%.

Kenneth Lewis CEO and president, said: “We owe taxpayers our thanks for making these funds available to the nation’s financial system and to our company during a very difficult time. Now that we have cleared this significant hurdle, which demonstrates the strength of our company, we look forward to continuing to play a key role in the economic recovery and helping to meet the changing needs of our customers and clients.”

BofA Merrill Lynch served as the sole book runner for the common equivalent securities offering and UBS Investment Bank served as co-manager and qualified independent underwriter.