Berkshire Hathaway made good on its plan to convert warrants into 700 million shares of Bank of America common stock, the bank announced on Tuesday.

Warren Buffett's conglomerate held the warrants since a deal in 2011, when he invested $5 billion in preferred shares of Bank of America, which at the time was struggling with large legal bills in the aftermath of the subprime lending crisis. The preferred shares paid 6 percent annually, or about $300 million.

But Bank of America raised its dividend to 48 cents a share annually after the Federal Reserve gave it the go-ahead in June. That was just what Berkshire was waiting for. At 48 cents, the dividend on the common shares pays about $336 million annually.

Berkshire's agreement was to convert the warrants to Bank of America shares at $7.14 each. The shares closed Tuesday at $23.58, meaning Berkshire's paper profit on the stake is about $12 billion.