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NEW YORK (
Bank of America (BAC - Get Report) was the winner among bank stocks on Thursday, with shares rising 9.5% to close at $7.65, although earlier gains were higher.
The company's agreement to sell 50,000 preferred shares to Warren Buffett's
Berkshire Hathaway (BRK.B) for $5 billion propelled Bank of America's shares, along with a few other banks and the monoline insurers, on an otherwise down day for the market.
As part of its investment deal with Bank of America,
Berkshire Hathaway received warrants to purchase up to 700 million of the bank's common shares at price of just above $7.14. So Buffet was in the money by $357 million at Thursday's market close.
The preferred shares have a 6% coupon, and Berkshire Hathaway will also receive a 5% premium when Bank of America redeems the preferred shares.
While the broad indexes all saw 2% declines, bond insurers piggybacked on Bank of America. Shares of
Radian (RDN - Get Report) shot up 12% to close at $2.70, while
MBIA (MBI) saw a smaller gain of 2% to close at $6.90. Units of both companies are suing Bank of America over mortgage claims.
KBW Bank Index (I:BKX) declined sightly to close at 37.65, with 20 out of 24 index components down for the session.
Other large banks seeing bucking the banking sector's downward trend on Thursday included
Citigroup (C - Get Report) which was up 5% to close at $29.83;
Morgan Stanley (MS), rising over 3% to close at $16.77; and
Wells Fargo (WFC - Get Report), which rose 1% to close at $24.76.
Thursday's financial loser was
Fifth Third Bancorp (FITB - Get Report), which declined over 3% to close at $9.73.