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BAC-WT - Bank of America Warrants


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BAC will generate a $750m gain from CCB share sale today.

 

Bank of America (BAC) agrees to sell its remaining stake in China Construction Bank - about 2B shares or 1% of the company. The transaction is expected to generate a pretax gain of around $750M in Q3.

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It looks like everyone is cutting mortgage bankers. Wells announced something similar.

 

From JPM 10-Q:

 

"Primary mortgage interest rates increased during the second quarter of 2013; if such rates remain at or above current levels, management estimates that the mortgage loan origination market in the U.S., including refinance and purchase, could be reduced by 30% to 40% during the second half of 2013, compared with the first half of the year. Management expects such a market environment to have a negative impact on refinancing volumes and margins, and, accordingly, the profitability of Mortgage Production within Mortgage Banking will likely be challenged."

 

 

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Interesting.

 

Thus is pure speculation on my part-- their focus on creating sustainable earnings rather than increasing dividends sounds like the advice Moynihan probably got from Warren during his recent lunch.

 

This is bound to disappoint some impatient stockholders.

 

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I have to believe the dividend will go up but instead of 30% of earnings like Jpm and wells it might only be half of that.

Lets say they earn -bac- 4.2 billion q3 and 4.5 q4 they are then at a run rate of 18 billion. Thirty percent of that would be about 5.5 billion a year but this may be a signal of closer to half that.

That would be my guess is what we see in march and the rest is towards buybacks.

Too mad Moynihan is so damn pusillanimous with equity capital buyback.

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Interesting.

 

Thus is pure speculation on my part-- their focus on creating sustainable earnings rather than increasing dividends sounds like the advice Moynihan probably got from Warren during his recent lunch.

 

This is bound to disappoint some impatient stockholders.

 

The US Treasury should be the most disappointed.  Stockholders less so.

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Interesting survey: http://www.federalreserve.gov/boarddocs/snloansurvey/201308/table1.htm

 

"Question 29 asks you to describe the current level of lending standards at your bank relative to the range of standards that has prevailed between 2005 and the present. For each of the loan categories listed below, please consider the points at which standards at your bank were tightest and easiest during this period."

 

My takeaway was that most think we are middle cycle with C&I being somewhat looser and everything else being somewhat tighter.  Here's the fed takeaway:

 

" Regarding loans to businesses, moderate net fractions of domestic banks reported that lending standards on four different kinds of C&I loans (investment-grade syndicated loans, below-investment-grade syndicated loans, other loans to large and middle-market firms, and loans to small firms) were currently at levels that were easier than the midpoints of the ranges that those standards have occupied since 2005. Foreign banks generally reported that the levels of standards on loans to large firms were easier than the midpoints, while standards on loans to small firms were reported to be about at the midpoint. Modest to moderate net fractions of domestic banks reported that the current standards on all types of CRE loans (construction and land development loans; loans secured by nonfarm, nonresidential structures; and loans secured by multifamily structures) were tighter than the midpoints of the ranges that those standards have occupied since 2005. Compared with the results in the July 2012 survey, these results for all types of C&I and CRE loans indicate some easing of credit conditions from the levels reported a year ago.

 

With respect to loans to households, moderate to large net fractions of banks reported that lending standards for all six categories of residential mortgages included in the survey (prime conforming mortgages, mortgages guaranteed by the Federal Housing Administration or the U.S. Department of Veterans Affairs, prime jumbo mortgages, subprime mortgages, nontraditional mortgages, and HELOCs) remained at least somewhat tighter than the midpoints of the ranges that those standards have occupied since 2005. Modest net fractions of domestic banks reported that standards were tighter than the midpoint for prime credit card, subprime credit card, auto, and other consumer loans. Compared with the results in the July 2012 survey, lending standards for many types of household loans appear to be little changed. "

 

http://www.federalreserve.gov/boarddocs/snloansurvey/201308/default.htm

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I am hoping this bodes well for BAC vs. AIG case.

 

 

Dismissed Mortgage-Related Lawsuit Against UBS Good For All Banks

Sep 18 2013, 18:13  |  about: UBS, includes: BAC, JPM BOOKMARK / READ LATER

In what comes as a relief to UBS (UBS), the U.S. Appeals Court in Philadelphia dismissed a lawsuit filed against it by the Pension Trust Fund for Operating Engineers alleging that the largest Swiss bank mis-represented the quality of underlying mortgages in securities worth $2.5 billion. [1] The lawsuit concerned mortgage-backed securities sold by UBS to the pension fund in 2007, and was filed in February 2010. The appeals court quashed the lawsuit saying that the pension fund waited too long to sue the global financial giant.

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WARREN BUFFETT, BRIAN MOYNIHAN TO SPEAK AT GEORGETOWN

 

SEPTEMBER 16, 2013 – NOTED BUSINESSMAN, INVESTOR AND philanthropist Warren Buffett will join Bank of America CEO Brian Moynihan at Georgetown for “A Conversation With Warren Buffett and Brian Moynihan” at 5 p.m. on Sept. 19 in Gaston Hall.

 

Buffett, the chair and CEO of Berkshire Hathaway, and Moynihan will participate in the event co-sponsored by the Global Social Enterprise Initiative (GSEI) at Georgetown’s McDonough School of Business and Bank of America.

 

Bank of America is the founding partner of GSEI, which promotes transformative solutions and meaningful investments for the world’s challenges in health and well-being, economic growth, the environment and international development.

 

And we can watch it live at http://www.georgetown.edu/news/bank-of-america-warren-bufett-conversation.html

 

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WARREN BUFFETT, BRIAN MOYNIHAN TO SPEAK AT GEORGETOWN

 

SEPTEMBER 16, 2013 – NOTED BUSINESSMAN, INVESTOR AND philanthropist Warren Buffett will join Bank of America CEO Brian Moynihan at Georgetown for “A Conversation With Warren Buffett and Brian Moynihan” at 5 p.m. on Sept. 19 in Gaston Hall.

 

Buffett, the chair and CEO of Berkshire Hathaway, and Moynihan will participate in the event co-sponsored by the Global Social Enterprise Initiative (GSEI) at Georgetown’s McDonough School of Business and Bank of America.

 

Bank of America is the founding partner of GSEI, which promotes transformative solutions and meaningful investments for the world’s challenges in health and well-being, economic growth, the environment and international development.

 

And we can watch it live at http://www.georgetown.edu/news/bank-of-america-warren-bufett-conversation.html

 

I'm not going to be able to watch it unfortunately--will some of you kind folks post the interesting bits for the non-watchers?  Hopefully, it will be recorded for later viewing.

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WARREN BUFFETT, BRIAN MOYNIHAN TO SPEAK AT GEORGETOWN

 

SEPTEMBER 16, 2013 – NOTED BUSINESSMAN, INVESTOR AND philanthropist Warren Buffett will join Bank of America CEO Brian Moynihan at Georgetown for “A Conversation With Warren Buffett and Brian Moynihan” at 5 p.m. on Sept. 19 in Gaston Hall.

 

Buffett, the chair and CEO of Berkshire Hathaway, and Moynihan will participate in the event co-sponsored by the Global Social Enterprise Initiative (GSEI) at Georgetown’s McDonough School of Business and Bank of America.

 

Bank of America is the founding partner of GSEI, which promotes transformative solutions and meaningful investments for the world’s challenges in health and well-being, economic growth, the environment and international development.

 

And we can watch it live at http://www.georgetown.edu/news/bank-of-america-warren-bufett-conversation.html

 

 

I'm not going to be able to watch it unfortunately--will some of you kind folks post the interesting bits for the non-watchers?  Hopefully, it will be recorded for later viewing.

 

 

 

Hmmm, There has a couple of meetings with Moynihan and Buffett now. I'm sure Buffett is giving Moynihan lots of good advice!

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