Countrywide stock gets boost from $2 billion BofA investment; MAF, National City merger sends MAF up

By Sheri Kasprzak

New York, Aug. 23 - Shares of Countrywide Financial Corp. benefited on Thursday from a $2 billion investment from Bank of America announced late Wednesday.

The investment helped boost the broader stock market early in the session, even though stocks gave up those gains by the end of the day.

The Dow Jones Industrial Average closed down 0.25 at 13,235.88; the Nasdaq composite index fell 11.10 to end at 2,541.70; and the Standard & Poor's 500 composite index lost 1.57 to close at 1,462.50.

Other mortgage lenders also benefited from Countrywide's bounty.

Thornburg Mortgage, Inc.'s stock climbed, HomeBanc Corp.'s shares were also lifted and Luminent Mortgage Capital, Inc.'s stock ended up.

Elsewhere, MAF Bancorp, Inc.'s shareholders approved the company's merger with National City Corp.

Countrywide up

"This situation has gotten so bad that the only way these mortgage lenders have an out is from bank investments," said one sell-side trader. "Obviously it's good news for CFC. People are regaining a certain amount of confidence in the name. There's that cushion there."

Another sell-side trader agreed, but noted that he couldn't tell if it was a permanent fix.

"The bank investment does boost confidence," he said, when asked about the impact of the investment on investor confidence. "I don't know how permanent a boost it will be. I don't think this is a problem where you can throw $2 billion at it and it's all better. Having said that, $2 billion does help. It's not in vain."

By 10:50 a.m. ET, Countrywide's stock had climbed by $1.34, or 6.14%. At the end of the day, the stock was showing a gain of 20 cents to close at $22.02 (NYSE: CFC). The stock, however, lost 2 cents after hours.

Volume also got a boost. By 10:50 a.m. ET, 51,715,026 shares had been traded compared with an average 23,338,800 shares. By the end of the session, 145,854,374 shares had been traded compared with an average 23,338,800 shares.

The investment

Bank of America invested $2 billion in the country's largest mortgage-lending company in the form of non-voting convertible preferred stock yielding 7.25% annually. The preferreds are convertible into common shares at $18.00 per share. The shares issuable upon conversion are restricted for 18 months after conversion.

"We believe that in the current turmoil, the stock market has been underestimating the value in Countrywide's operations and assets," said Kenneth Lewis, Bank of America's chairman, in a statement.

"This investment reflects our confidence in their business and recognizes the importance of the company in providing home financing across the country. We hope this investment will be a step toward a return to a more normal liquidity in the mortgage markets. Countrywide has a strong mortgage origination business and it services the mortgages of one in seven American households."

"Bank of America's investment in Countrywide represents a vote of confidence and strengthens our balance sheet, enabling us to position Countrywide for future growth and success," said Angelo Mozilo, chief executive officer of Calabasas, Calif.-based Countrywide, in a news release.

Other mortgage shares up

Several other mortgage lenders watched their stock improve on the BofA investment in Countrywide.

"It does give a shot of confidence to the rest of the lending market, in general," said one sell-side trader. "It does ease liquidity concerns, not just for Countrywide but for others [in the mortgage sector]."

Shares of Thornburg Mortgage gained 63 cents, or 4.91%, to close at $13.47 (NYSE: TMA).

Luminent Mortgage's stock climbed by 5 cents, or 4.35%, to end at $1.20 (NYSE: LUM). Earlier in the session, the stock was up more than 11%.

HomeBanc's stock was up two-tenths of a cent, or 6.06%, to end at $0.035 (Pink Sheets: HMBN).

MAF Bancorp to merge with National City

MAF Bancorp saw its shares lifted slightly on Thursday after shareholders approved its merger with National City.

The stock gained 3 cents to close at $53.20 (Nasdaq: MAFB). Meanwhile, shares of National City were off 29 cents, or 1.03%, to close at $27.98 (NYSE: NCC). After the market closed, the shares were up 4 cents.

Under the merger terms, MAF Bancorp's shareholders will receive $56 worth of shares of National City in a tax-free exchange.

Headquartered in Clarendon Hills, Ill., MAF is the parent company of MidAmerica Bank. National City, headquartered in Cleveland, is a financial holding company.

Craftmade to pass on sale

In other merger-related news, Craftmade International, Inc. said it will no longer seek a sale of the company due to current market conditions.

"The independent committee has canvassed the market and performed its due diligence for strategic alternatives for the company," said James Ridings, the company's CEO, in a statement released Thursday morning.

"We believe that given the current volatility in the house and debt markets, it is in the best interest of long-term shareholder value to pursue selective and opportunistic acquisitions in order to achieve more advantageous growth objectives through enhanced product offerings and potentially expanding into adjacent product categories and sales channels, which will be less reliant on the overall housing market."

Craftmade, in the statement, said it has been evaluating several acquisition candidates and is involved in discussions with some of those candidates.

Craftmade's stock fell by 4%, or 68 cents, to end at $16.34 (Nasdaq: CRFT). The stock lost another 36 cents in after-hours trading activity.

Headquartered in Coppell, Texas, Craftmade designs and distributes ceiling fans, lighting products, decorative light bulbs, door chimes, ventilation systems and other related accessories.

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