Independent bank analyst Nancy Bush believes the CEO search still hinges on BofA directors’ debate over choosing an internal versus external candidate. But she also believes Curl’s work could boost his chances. “Perhaps this development will give Mr. Curl a leg up on the interim-CEO front and Ken Lewis can indeed depart at year-end,” she writes in a note to clients.

And don’t forget about Lewis. Earlier this year, the embattled banker indicated he would retire only after TARP had been repaid. But when public scrutiny mounted this summer, Lewis announced he would step down at the end of the year. He said the path had been cleared for the bank to repay TARP, but he gave no indication that could be done until next year.

Now Lewis will leave BofA on a positive note, with the integration of his biggest deals under way and the bank no longer indebted to taxpayers.

“Not that this has anything to do with his ego, but Ken does get to go out on a much better note,” says Jeff Davis, an analyst at FTN Midwest Research.

Lewis didn’t mention TARP when he spoke Wednesday at a Charlotte Chamber luncheon. And he didn’t respond to questions after the event, choosing to release a statement Wednesday evening instead.

“We appreciate the critical role that the U.S. government played last fall in helping to stabilize financial markets, and we are pleased to be able to fully repay the investment, with interest,” Lewis said in a prepared statement. “As America’s largest bank, we have a responsibility to make good on the taxpayers’ investment, and our record shows that we have been able to fulfill that commitment while continuing to lend.”

‘Major Positive’ for Stock

Harralson says the TARP payment also will improve the future performance of BofA’s stock. He says analysts have been trying for months to determine how a TARP repayment would affect the bank’s shareholders. Now, with the TARP issue resolved, investors can move forward with more confidence, Harralson says.

To repay the government, BofA will have to sell more stock as part of a move to raise capital. When that’s completed, the bank will have about 10 billion shares, up from about 4.4 billion before the recession. Harralson concedes that dilution is less than ideal. But it will help analysts—and investors—better understand what level of earnings per share to expect in the future.

“The recession has definitely diluted shareholders,” he says. “But this (TARP payment) is a major positive for the stock.”

Harralson rates the stock as a “buy,” with a target price of $19 per share. BofA shares closed at $15.65 Wednesday before the announcement. By midmorning Thursday, the share price had jumped more than $1, trading as high as $16.74.

To date, BofA has paid $2.54 billion in dividends to the U.S. Treasury on the TARP investment. Repaying TARP will save the company approximately $3.6 billion in annual dividend costs from TARP, the bank says.

BofA will repay TARP by repurchasing all the preferred stock owned by the government. Repurchase of TARP preferred stock is expected to reduce income available to common shareholders in the fourth quarter by $4.1 billion.

After the TARP repayment and the related capital raises, the company’s Tier 1 capital ratio would be 11 percent. The Tier 1 Common capital ratio would be 8.5 percent. Both ratios would meet the government’s standard for considering a bank well capitalized.