Editor’s Note: Related tickers: Bank of America Corp (NYSE:BAC), BlackRock, Inc. (NYSE:BLK), Metlife Inc (NYSE:MET), American International Group, Inc. (NYSE:AIG)
Bank of America $8.5 billion settlement heads for court showdown (Reuters)
A long-running fight comes to a head on Monday when court proceedings begin over an $8.5 billion settlement between Bank of America Corp (NYSE:BAC) and investors in mortgage securities that turned sour in the financial crisis. Bank of America agreed to the proposed settlement in June 2011 to resolve claims by investors who held bonds issued by mortgage lender Countrywide Financial Corp, which Bank of America Corp (NYSE:BAC) bought in 2008. Twenty-two institutional investors, including BlackRock, Inc. (NYSE:BLK), Metlife Inc (NYSE:MET) and Allianz SE’s Pacific Investment Management Co entered into the deal. But American International Group, Inc. (NYSE:AIG) and others objected, saying the settlement offered them only a fraction of the money they lost.
Strategy To YieldBoost Bank of America From 0.3% To 4.7% (Forbes)
Shareholders of Bank of America Corp (NYSE:BAC) looking to boost their income beyond the stock’s 0.3% annualized dividend yield can sell the January 2015 covered call at the $17 strike and collect the premium based on the $1.00 bid, which annualizes to an additional 4.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 4.7% annualized rate in the scenario where the stock is not called away. Any upside above $17 would be lost if the stock rises there and is called away, but Bank of America Corp (NYSE:BAC) shares would have to advance 23.2% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 30.4% return from this trading level, in addition to any dividends collected before the stock was called.
Bank of America CEO Moynihan: ‘Largely Done’ Selling Mortgage-Servicing Rights (WSJ)
Bank of America Corp (NYSE:BAC) Chief Executive Brian Moynihan told investors Thursday that the bank has largely completed the sale of mortgage-servicing rights. Mortgage servicing is the business of collecting mortgage payments and conducting foreclosures. The Charlotte bank has been selling such servicing rights to improve its capital levels. In the first quarter, Bank of America agreed to sell servicing rights for about $330 billion in unpaid principal mortgage balances. Terms were not disclosed. Bank of America Corp (NYSE:BAC) still services mortgages with a total unpaid principal balance of $1.2 trillion, mostly mortgages it doesn’t hold on its books but services for Fannie Mae (FNMA), Freddie Mac (FMCC), and private investors.
AIG Fights BofA Mortgage Accord (WSJ)
Bank of America Corp (NYSE:BAC) -1.24% fight for approval of an $8.5 billion settlement with investors over soured mortgage securities has one giant hurdle in its path: American International Group, Inc. (NYSE:AIG) -3.94% A hearing in New York State Court kicks off on Monday in which a judge will decide whether to approve the 2011 pact. A decision could help the Charlotte, N.C., bank put a chunk of its financial-crisis-era litigation behind it. But insurer American International Group, Inc. (NYSE:AIG) has sought in recent weeks to adjourn the proceeding. At the same time, American International Group, Inc. (NYSE:AIG) is pushing Bank of America to pay billions of dollars to settle other claims over mortgage-backed-securities losses.
Bullish Fervor for a Big Bank (Barrons)
The options market is once more looking for Bank of America Corp (NYSE:BAC) to set another milestone in the stock market. Investors are aggressively buying bullish calls that would pay off if Bank of America Corp (NYSE:BAC), recently trading at $13.84, surges above $14. Less than a month ago, investors aggressively bought calls that would pay off big if Bank of America’s stock surged above $13. Some of those calls increased more than 200% in just a few days, a fact not lost on legions of investors who are trying to repeat the trade as Bank of America’s stock nears $14. (See The Striking Price, “Bulls Are Betting on Bank of America,” Barrons.com, May 9.)
Credit union moves into former Bank of America branch now owned by Amway Corp. (MLive)
Lake Michigan Credit Union is opening a new full-service branch office in a former Bank of America Corp (NYSE:BAC) branch that was purchased by Amway Corp in 2011 as part of Amway’s plan to makeover the village’s commercial core. The branch, which officially opens on Monday, June 3, is being leased by the credit union with plans to locate a permanent branch in the village as part of Amway’s redevelopment, said Don Bratt, vice president of marketing. Amway purchased the 1-acre branch site in August, 2011 for $605,000, according to Kent County property records. The parcel was one of six contiguous parcels the company bought to create a 22-acre site for redevelopment.
