This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Bank of America: Mortgage Rumor Winner, Denial Loser (Update 3)

Stocks in this article: BAC

Updated with market close information and a White House denial of rumors that President Obama might announce a massive new mortgage refinancing program.

NEW YORK ( TheStreet) -- Bank of America (BAC) led a financial sector rally on Thursday, with shares rising 9% to close at $6.31.

Most bank stocks showed strength, amid rumors that President Obama might soon announce a $1 trillion federal program to spur mortgage loan refinancing and prop up the U.S. housing market, along with his reelection campaign.

After the market close, Bloomberg quoted an administration official as saying the White House had "no plans for a new mass mortgage refinancing program," which promptly sent Bank of America's shares down 1.5% in after-market trading.

Following another U.S. Labor Department report showing a decline in unemployment claims, with 372,000 initial jobless claims during the week ended Dec. 31, declining 15,000 from the prior week's reading, payroll firm Automatic Data Processing reported that U.S. companies created 325,000 new jobs in December, with much of the growth coming from small and medium sized businesses.

While the overall market was indifferent, the KBW Bank Index (I:BKX) was up over 2% to close at 41.89, with all 24 index components all showing gains, except for First Niagara Financial Group, which was down two cents to close at $8.97.

With Bank of America being the nation's largest mortgage loan servicer and suffering so much in the aftermath of its disastrous acquisition of Countrywide Financial in 2008, and with the shares so heavily discounted to the company's Sept. 30 tangible book value of $13.20, according to SNL Financial, it isn't surprising to see Bank of America having the biggest afternoon pop among the largest U.S. banks. .

According to SNL, Bank of America had the lowest Tier 1 common equity ratio among the "big four" U.S. bank holding companies, at 8.65% as of Sept. 30, but that ratio is expected to climb significantly when the company reports its fourth-quarter results on Jan. 19, with the company previously announcing that its Tier 1 capital increased by $3.9 billion from the issuance of new common shares during the fourth quarter and the retirement of preferred shares and long-term debt.

With no major increase in its mortgage litigation expense and putback claims expected for the fourth quarter, a second-straight quarterly profit for the company should provide a further boost to its regulatory capital.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,254.82 +185.95 1.09%
S&P 500 2,006.10 +33.36 1.69%
NASDAQ 4,626.24 +78.4060 1.72%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs