NEW YORK (TheStreet) - Bank of America (BAC - Get Report) has agreed to settle a class action lawsuit against itself, paying $32 million in damages. The lawsuit, filed on behalf of 7.7 million Bank of America customers, alleges the bank used a robotic debt collection service to harass debtors.
The case could set precedents. Reuters believes the cash payout to be the largest ever under the Telephone Consumer Protection Act of 1991, a law designed to protect consumers against unsolicited calls.
Bank of America denied the allegations, saying it chose to settle the matter to avoid continued legal costs. Bank of America also agreed to cease calling customers' cell phones unless given express permission to do so.
Bank of America shares closed the Monday session lower, falling 0.72% to $13.80, as 103.7 million shares changed hands. That was well above its one-month average trading volume of 86.8 million.
The bank lagged the S&P 500 which fell 0.6% to close at 1,681.55.
"We rate Bank of America a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, solid stock price performance and increase in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 151.29% to $46,128 million when compared to the same quarter last year.
- Compared to its price level of one year ago, BAC is up 59.72% to its most recent closing price of 14.08. Looking ahead, our view is that this company's fundamentals should not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization.
- Since the same quarter one year prior, revenues slightly dropped by 1.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Although BAC's debt-to-equity ratio of 2.34 is very high, it is currently less than that of the industry average.
- You can view the full analysis from the report here: BAC Ratings Report