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Bank of America joined the crowd of financial institutions reporting good earnings last week. The Charlotte, N.C., bank beat the expectations of analysts by saying today that it had a US$2.42B Q-2 profit after the payment of preferred dividends. Bank of America has struggled through the acquisitions of lender Countrywide Financial Corp. and investment bank Merrill Lynch & Co., and looks like it is getting its financial house in order. After rising in early trading, Bank of America shares fell 35 cents to $12.82 in mid-day trading. The second-quarter profit amounted to 33c per share and compared with a profit US$3.22B, or 72c, a year earlier. Although the numbers were below last year’s, the earnings still beat the forecasts of analysts surveyed by Thomson Reuters, who predicted the bank would come in at 28c per share.

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Last week Goldman Sachs Group Inc. settled its US$10B debt with the US taxpayer; now, what will they do about Warren Buffett? Last year, Buffett’s Berkshire Hathaway Inc. invested US$5B in Goldman and acquired preferred shares and warrants to buy common stock, making Buffett’s presence large, because of his reputation for integrity and as one of the world’s savviest investors. So what will Buffett, now the 2nd wealthiest man in the United States do? “Basically not much,” said Vahan Janjigian, author of the book ‘Even Buffett Isn’t Perfect.’”He has a history of making fairly large investments in these kinds of companies and sitting back and letting the management team run the company.” Janjigian expects Buffett to sit tight as Berkshire collects US$500M of annual dividends on the preferred shares and earns paper profits on accompanying warrants to buy an additional US$5B of common stock at $115 per share for up to five years.

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