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BAC-WT - Bank of America Warrants

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gokou3 Newbie

gokou3

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If you haven't read the latest Fortune, run don't walk.

 

You mean that positively or negatively?

 

http://money.cnn.com/2013/04/11/news/companies/moynihan-bank-america.pr.fortune/index.html

 

Can't read whole thing because I'm not a subscriber..

 

Can anyone give provide a summary for those of us who probably won't buy a hard copy?

 

I just got a 30-day digital pass for $2.99.  I'd say it's worth it for this (generally positive) article alone.

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xazp Newbie

xazp

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http://online.wsj.com/article/SB10001424127887323789704578447304181997608.html

 

Looks like MBI is trying to avoid the state taking over their bad subsidiary.  Wonder the consequences on all this litigation.  Article says they have big cash drains in May, and possibly out of cash in August.  Kind of lends credence to BAC's claim that the restructuring was designed to screw policy holders.

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Aberhound Newbie

Aberhound

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http://www.rollingstone.com/politics/news/everything-is-rigged-the-biggest-financial-scandal-yet-20130425?link=mostpopular1

 

Another Rolling Stone article explaining how banks set prices for many markets. This one focuses on the interest rate swap prices which are 70% of derivatives or hundreds of trillions with prices set by a group called "Treasure Island".

 

Some jobs are better than others.

 

 

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Straddle Newbie

Straddle

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If you haven't read the latest Fortune, run don't walk.

 

You mean that positively or negatively?

 

http://money.cnn.com/2013/04/11/news/companies/moynihan-bank-america.pr.fortune/index.html

 

Can't read whole thing because I'm not a subscriber..

 

Can anyone give provide a summary for those of us who probably won't buy a hard copy?

 

I'm also interested in a summary. Anyone?

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Kraven Newbie

Kraven

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If you haven't read the latest Fortune, run don't walk.

 

You mean that positively or negatively?

 

http://money.cnn.com/2013/04/11/news/companies/moynihan-bank-america.pr.fortune/index.html

 

Can't read whole thing because I'm not a subscriber..

 

Can anyone give provide a summary for those of us who probably won't buy a hard copy?

 

I'm also interested in a summary. Anyone?

 

The article basically revolves around a couple of themes. The first, nothing new, is how BAC has been focused for so long on preservation and now is moving towards focusing on growth. The second part is that as part of their growth initiatives they are concentrating on being more customer centric and how they are redoing some branches with that in mind. Finally the article weaved in how Moynihan was originally in "trouble" but has done a good job and appears to be the right man for the job.

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xazp Newbie

xazp

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http://finance.yahoo.com/news/judge-questions-fraud-statutes-against-022729892.html

 

A Manhattan judge indicated Monday he was "troubled" by how the U.S. government applied a rarely used law in a suit against Bank of America Corp (BAC.N) over the sale of toxic mortgages to Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB).

 

The hearing before U.S. District Judge Jed Rakoff marked a challenge of the U.S. Department of Justice's bid to bring fraud lawsuits against Wall Street banks under a powerful law enacted following the savings and loan scandals of the 1980s.

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xazp Newbie

xazp

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Well for people fixated on the settlement, here is a list of all 700+ filings sent to judge Kapnick:  http://iapps.courts.state.ny.us/iscroll/SQLData.jsp?IndexNo=651786-2011&Submit2=Search

 

I'm looking through them.  So far it looks like FHFA, FHLB-SF, RMBS acquisition and Clayhill investors have dropped objections to the settlement, and Fir Tree has added a note supporting the settlement.  AIG is still against. 

 

 

 

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xazp Newbie

xazp

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For those of you that are interested, I put in the statements from BONY, from the institutional investor group, and one of the objectors in this directory:  http://sdrv.ms/113XzjQ

 

Another set of investors just dropped objections:

 

Libremax Capital LLC, Lincoln Financial Group, NCMIC Insurance Company, Stone Creek LLC, Taconic Capital Advisors L.P., Blue Mountain

Capital Management LLC, and American Equity Investment Life Insurance Company (the “Withdrawing Intervenors”), by and through their attorneys, Peter N. Tsapatsaris,

LLC, hereby withdraw their objection to the Settlement.

 

 

 

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blainehodder Newbie

blainehodder

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http://newsroom.bankofamerica.com/press-release/corporate-and-financial-news/bank-america-announces-comprehensive-settlement-mbia-inc

 

The official release:

 

As part of the settlement, Bank of America will pay MBIA approximately $1.6 billion in cash and remit to MBIA all of the outstanding MBIA 5.70% Senior Notes due 2034 that Bank of America acquired through a tender offer in December 2012. In addition, Bank of America will terminate all of its outstanding credit default swap (CDS) protection agreements purchased from MBIA on commercial mortgage-backed securities (CMBS), as well as terminate certain other trades in order to close out positions between the companies.

 

MBIA will issue to Bank of America warrants to purchase 9.94 million shares of MBIA common stock, or approximately 4.9% of its currently outstanding shares, at an exercise price of $9.59 per share. The warrants may be exercised at any time prior to May 2018. Also, Bank of America will provide a senior secured $500 million credit facility to MBIA Insurance Corp.

 

Bank of America will record $1.6 billion in additional pretax charges in the first quarter of 2013, of which $1.3 billion is related to the settlement and the remainder is related to other monolines. The after-tax effect of the additional charges will reduce the company's first-quarter 2013 net income to $1.5 billion, or $0.10 per diluted common share, from the $2.6 billion, or $0.20 per diluted common share reported on April 17, 2013. As the settlement occurred prior to filing the company's Quarterly Report on Form 10-Q for the period ended March 31, 2013, generally accepted accounting principles require Bank of America to apply the additional charges to the financial results for the quarter ended March 31, 2013.

 

The effect of these actions is expected to increase the company's estimated Tier 1 common capital ratio under Basel 3 as of March 31, 2013 by 10 basis points to 9.52%1, reflecting the reduction in risk-weighted assets associated with the terminated CDS contracts, partially offset by the additional litigation expense. In addition, the company's tangible book value per common share2 at March 31, 2013 is $13.36 per share, $0.10 per share less than reported on April 17, 2013.

 

These charges will be reflected in Bank of America's financial statements to be included in the company's First Quarter 2013 Report on Form 10-Q, which will be filed with the Securities and Exchange Commission on or prior to May 10, 2013.

 

 

 

I wouldn't have thought there would be a charge to Q1 earnings.  What are your thoughts?  More than enough reserved already, no?  What am I missing?

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MYDemaray Newbie

MYDemaray

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I wouldn't have thought there would be a charge to Q1 earnings.  What are your thoughts?  More than enough reserved already, no?  What am I missing?

 

They did have to write down the $1.3bn of CDS at Merrill which wasn't in reserves...

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nkp007 Newbie

nkp007

Posted
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I wouldn't have thought there would be a charge to Q1 earnings.  What are your thoughts?  More than enough reserved already, no?  What am I missing?

 

They did have to write down the $1.3bn of CDS at Merrill which wasn't in reserves...

 

Two things that annoy me about $BAC (but have not prevented a concentrated investment):

 

1) I hate to see shares outstanding go up at the rate it is going up

2) It doesn't look like they reserve for anything. Someone sneezes and they have have to expense it because they haven't reserved for it.

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fareastwarriors Newbie

fareastwarriors

Posted
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http://online.wsj.com/article/SB10001424127887324326504578467233001450330.html?mod=wsj_streaming_stream

 

 

BofA's Hefty Insurance Premium

 

 

It isn't every day a bank can agree to shell out $1.7 billion and lead investors to do anything but cry. Unless it is Bank of America BAC +5.23%.

 

BofA announced on Monday an agreement to settle its long-running dispute with bond insurer MBIA MBI +45.37%. This will see BofA pay $1.6 billion in cash, give MBIA a $500 million line of credit and take a nearly 5% stake in the company.

 

The real winner is MBIA. The settlement guarantees that a unit of the insurer won't be taken over by New York state regulators. And while less than the $3 billion some investors hoped for, BofA had originally argued it probably wouldn't end up owing MBIA anything for claims of $3 billion to $5 billion related to soured mortgages. That was because the bank also had claims of about $6 billion against MBIA related to other debt it had insured.

 

But the deal has some benefits for BofA, too. It puts yet another big legal question behind the bank. BofA had already reached a number of other settlements related to mortgages mostly originated and sold to investors by Countrywide Financial, which it acquired in 2008. These have included deals with Fannie Mae FNMA -0.61%and Freddie Mac, FMCC 0.00%as well as insurers such as Assured Guaranty.

 

Until now, though, an agreement with MBIA has proved elusive. The MBIA dispute was particularly complex, involving several different strands of litigation and numerous, thorny legal issues. Some investors feared these could lead to far larger-than-expected losses at the bank, especially as BofA had of late been losing in court on some important arguments.

 

So eliminating this threat will provide relief. As for the short-term financial hit, BofA said it would take a $1.1 billion, after-tax charge against first-quarter results, reducing net profit to $1.5 billion from $2.6 billion. That is even though BofA said it had $881 million in litigation costs in the first quarter, in part related to MBIA. The bank had also reported $4.3 billion in litigation expense in 2012.

 

While the expense is manageable, shareholders should ask why it took BofA and chief Brian Moynihan so long to settle and why the bank hadn't been reserving even more, earlier.

 

As well, the long fight may have provided ammunition for other actions against BofA. Indeed, the lawyer at Quinn Emmanuel representing MBIA is also representing American International Group AIG +2.16%in a suit against BofA as well as the Federal Housing Finance Agency in legal action against a group of banks including BofA.

 

And at least one other big legal cloud still looms. BofA has to receive approval for its proposed, $8.5 billion settlement of claims related to private investors who bought mortgage-backed bonds through more than 500 trusts. A hearing is scheduled for late May. While the bank remains confident the deal will be approved, there are objectors.

 

The glass-half-full view is that BofA's legal burden is getting lighter. But it sure is an expensive way to take a load off.

 

 

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wescobrk Newbie

wescobrk

Posted
Posted

I was annoyed on April 17 when they admitted they went 2.5 weeks without buying any stock.

Now Moynihan is buying at 12.90 instead of 12 roughly.

It's not a huge loss of value but I'm still annoyed with him sucking his thumb for those 2.5 weeks.

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ECCO Newbie

ECCO

Posted
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I was annoyed on April 17 when they admitted they went 2.5 weeks without buying any stock.

Now Moynihan is buying at 12.90 instead of 12 roughly.

It's not a huge loss of value but I'm still annoyed with him sucking his thumb for those 2.5 weeks.

 

Were they allowed to buy stock while they knew they were closed to do a deal with MBIA? I dont think so.

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Uccmal Newbie

Uccmal

Posted
Posted

I was annoyed on April 17 when they admitted they went 2.5 weeks without buying any stock.

Now Moynihan is buying at 12.90 instead of 12 roughly.

It's not a huge loss of value but I'm still annoyed with him sucking his thumb for those 2.5 weeks.

 

Buybacks bad, Dividends good!  I knew full well this was going to be the result.  Buybacks give management too much discretion and not enough discipline.  Dividends eliminate the discretion and institute discipline. 

 

As to the other criticisms, the stock is up significantly.  Why, Because the long black veil covering the perisitent claims against them is being lifted.  The unknowns are becoming known and less frightening.  I am thinking that Merrill could not reserve for the CDS because they were not part of any projected losses.  They have been added in as part of a settlement. 

 

Frankly, too big agreements in two days.  The settlement with MBIA should also kill the successor liaibilities which has been of significant concern, should it not.  Thats a Q for our legal eagles around here.  As these things drop away, the stock should start to really run. 

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Uccmal Newbie

Uccmal

Posted
Posted

I was annoyed on April 17 when they admitted they went 2.5 weeks without buying any stock.

Now Moynihan is buying at 12.90 instead of 12 roughly.

It's not a huge loss of value but I'm still annoyed with him sucking his thumb for those 2.5 weeks.

 

Were they allowed to buy stock while they knew they were closed to do a deal with MBIA? I dont think so.

 

Why not, The final settlement was not material for bac.

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