Live-Blogging The Bank of America Stress Test Conference Call

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While I do Vikram, commenter Investorcluzo gets to have all the fun with a sauced up Ken Lewis.
- 6:02 pm we're live!
- play along: http://webcastingplayer.corporate-ir.net/player/playerHOST.aspx?c=71595&EventId=2214128&StreamId=1310434&IndexId=&TIK={5ef39b08-9b04-4adf-beb2-1827606489c9}&RGS=3
- page 3 of the slide clearly states: "estimates provided herein by the Federal Reserve or Bank of America are not to be considered forecasts of expected losses or revenues" - this is just a test, only a test (in case you forgot)...
- presentation is 18 pages of sheer wonderment...
- Kenny-boy: we have to have a plan in 4 weeks. the bogey is large, but we have significant opportunities. we do not expect to convert tarp. oops, a little fumble getting this next point out. ken was humbled by the message to remove him from chairman (cue the drunk tears in 3, 2, 1...).
- Walter Massey, new chairman, announces the board set up a new committee (so they could get paid more $$$) to review capital yadda, yadda...changes do not mean a change in strategy "our model is not broken."
- Back to Boone's Boy: "we are well positioned...need to put our heads down"
- Joe Price in the house: The Fed changed the rules on us - they want common equity to be a part of the equation. regulators said we needed $33.9 bn of additional tier 1 common (not $34 b1tches).
- Price: regulators are not giving credit for deleveraging of the balance sheets of MER and BAC
- Okay, let's compare 1Q vs Fed model: loss rates would need to double and remain to reach fed projection on residential mortgages; on the commercial portfolio 1.68% vs 3.67% for the feds (I guess they read Barron's on Sunday)
- Damn Joe, slow down, I can't follow all this slight of hand...
- Page 11: target $17 bn increase in common - converting NON-Gov't pfd; ATM program - get ready for undercover dilution
- exchange offer for institutionally held pfd and convertable pfd. expect to price at a discount - may include a dutch auction.
- asset sales (as previously rumored).
- leaves a $7bn hole from "actual performance" over the next 6 months.
- Here we go: "finally, we could convert our government pfd stock" oh, but we're not going to do that, so I'm not going to elaborate...
- Meredith Whitney up first (holla!): what up jp? true up or roll forward for pre-provision net? regulators excluded securities gains that we may have included, but they didn't add back net interest income that we would have made
- what kind of disclosure will we get going forward? issuances are reportable items (review SEC regs much?).

- Paul FBR: where is my mistake on the pre-tax provision? FEDs only talked about items in their slides. how are they treating the taxes? I'm hearing stabilization in the housing market - we talked to brokers in Fl, hearing prices going above the ask. what are you seeing? I would point to CA re: severity/stabilization...stutter, stutter.
Ken to rescue: anecdotal evidence that the extreme scenario is less of a possibility.
- Mike Mayo baby: $10 bn from asset sales, so Columbia is on the block?
Ken: As I mentioned and on the slide - YES (damn!)
- Nancy Bush in the house: I'm a little fuzzy on how you plan to get out of TARP?
Ken: you have to look at the "theoretical" piece...you're going to have to have capital markets improve/debt markets improve...we're taking one big step by raising private equity money.
- Moesche: how did you think about the different avenues for raising the capital?
Ken: we look for the best execution, we'll see the progress on the mix and address the mix based on execution. asset sales have multiple bidders (who's buying what? do tell).
- Moesche: Do you have to demonstrate that you can issue 5 year un guaranteed debt?
JP: tap dance around this one..."we currently not in the market for that"
- Matty O (DB): how was the vested/unvested piece of OCI?
JP: no credit (c'mon man, is that all you got?)
- MO: negative of TARP to cap?
KL: I get comments from institutional investors...they keep saying "as soon as you can get gov't money out do it."
- Betsy (MS): why wouldn't you take advantage of selling (appreciated) assets to take gains?
JP: economic trade-offs ('nough said).
- Betsy: off balance sheet issues?
JP: 1Q we consolidated the risk weighted assets of the credit card trust (thought you could slip us up).
- Jeff Harte (Sandler): conversion offer on the $1000 par are you excluding the $25 par?
JP: just laying out "an avenue of menues" (is that charlotte speak?) how about "a menu of options"
- Nancy is back: will getting out of TARP get you out of the "special" category
KL: "I don't know the term special"...first step is finality on the wrap.
- Nancy: any opportunity for the fed to "dismantle your company"
KL: I have not seen any indication of such.
- No more questions, we turn the call back over to Mr. Lewis:
Lews: I have no more comments other than "never has a test been so aptly named...[giggles]"
It's Boone's Time!

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