BofA Acquires Provo Craft Stake - Analyst Blog

Earlier this week, BAML Capital Partners, the private-equity arm of Bank of America Corp. (BAC), acquired a majority stake in Utah-based manufacturer and retailer of hobby and craft products Provo Craft & Novelty Inc.
 
However, Provo Craft management and Lehi, Utah-based private-equity firm Sorenson Capital will continue to hold significant equity stakes in the company.
 
The recent investment by the BofA unit will significantly help Provo Craft to grow its business with innovative products.
 
Bank of America’s fourth-quarter results were a nickel worse than the Zacks Consensus Estimate. Results were hurt primarily by a $4.0 billion negative impact associated with the repayment of the bailout money. Also, continued weakness in the overall economy and stress on consumers continue to result in high credit costs.
 
The market turmoil was more harmful to BofA than its peers. However, the company has concluded its biggest acquisitions. BofA acquired Merrill Lynch almost during the height of the financial crisis last year. It also acquired Countrywide Financial Corporation in Jul 2008.
 
The CEO views these deals as beneficial for stakeholders of the company. Furthermore, this will allow the bank to focus on rebuilding customer relationships.
 
BofA said on Wednesday that it would forgive about $3 billion in principal loan amount for about 45,000 troubled borrowers. BofA is expected to start the process in May 2010. Following the execution, BofA will be the first U.S. mortgage lender to take such a systematic approach to reduce mortgage principal to help distressed borrowers by preventing foreclosures.
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