"In the current turmoil, the stock market has been underestimating the value in Countrywide's operations and assets," Bank of America Chief Executive Kenneth Lewis said in a statement. "We hope this investment will be a step toward a return to more normal liquidity in the mortgage markets."
Countrywide's market value was about $12.6 billion as of Wednesday's close. Countrywide's shares rose 19.5% to $26.07 in after-hours electronic trading. Bank of America shares 95 cents to $52.60 after-hours.
"It's a $2 billion vote of confidence from a major financial institution," said Steve Persky, a portfolio manager at Dalton Investments in Los Angeles, which invests $1.2 billion. "Are we out of the woods yet in the mortgage market? No."
In January, before the mortgage crisis surfaced, Charlotte, North Carolina-based Bank of America was the subject of speculation it might buy or enter a joint venture with Countrywide. Lewis at the time said "we're not particularly interested in the wholesale and correspondent business."
The impetus behind the $2 billion investment and the bank's longer-term goals were not immediately clear.
"Eventually I think they'd be looking to acquire the whole firm," said Ganesh Rathnam, a Morningstar Inc analyst who covers Bank of America. "I don't see why they would otherwise buy $2 billion into it."
Bank of America probably could not acquire Countrywide outright for a while. The bank's pending acquisition of LaSalle Bank from ABN AMRO would push it up against a 10% federal cap on deposits. Buying the operator of Countrywide Bank would probably push it over.
Goldman Sachs and law firm Wachtell, Lipton, Rosen & Katz advised Countrywide on the transaction. Bank of America was advised by its own investment bankers and law firm Cleary Gottlieb Steen & Hamilton LLP.