Chillin' out till it needs to be funded
Even as the Euro Crisis theater alongside raised a lot of alarmbells before the vote went through, banks in general were suddenly looking much more positive after BofA settled with PIMCO, FRBNY, Blackrock, Metlife and 18 other investors for countrywide/BofA sub prime portfolios in which the plaintiffs had alleged that the bank had not done the required paperwork and packaged assets of lower quality into the MBS/ABS sold by the bank. Before the settlement BofA had expected an outstanding claim of $12.2 bln and had already provisioned $4.4 bln including legal costs for the ltigation against it in misselling / passing on bad loans to its lenders.
Along with its sale of CCB and Blackrock stakes the bank might infact walk away without a scratch on its P&L statements in what might be the biggest settlement made by a single bank yet. The $8.5 bln settlement is more than all its 2009 profits and more than half its 2008 profits reports Bloomberg Tv
The preliminary earnings release for BofA therefore was a pretty sunny experience as the bank posited profits of $0.28-$0.33 ahead of analysts expectations of $0.28 for the first half of 2011. The loss of $0.88 – $0.93 cents expected for second quarter per the banks statement, includes a further $2.8 bln impairment charge on its remaining credit portfolio. The stock was up more than 3.5% on the news. the Government still holds almost 80% of Bank of America Merrill Lynch