Bank of America CEO Brian Moynihan told shareholders gathered in Charlotte on Wednesday that the bank’s path to higher earnings, and therefore dividends, is straightforward.
“Our best opportunities for growth are to supply four or five key products to people: bank accounts, debit cards, credit cards, home finance, and car loans,” he said. “Our job is just to do that, and do that, and do that.”
A year after a highly contentious shareholder meeting, Wednesday’s event was more subdued both inside and outside. More than two dozen people asked Moynihan pointed questions about the bank’s involvement with coal companies, but overall the questioning was less hostile than last year. And the protesters outside numbered only a few dozen, in contrast to the hundreds who blocked the streets a year ago.
The overarching message from the bank was that it has turned a corner after several years of settling massive litigation and absorbing mortgage losses.
“Three and a half years ago, our train was off the tracks,” Bank of America board chairman Chad Holliday said at the start of the meeting. “What I can report to you today from your board of directors: The train is on the tracks. All the wheels are touching. We are moving forward. And we have learned from the past.”
Bank of America’s stock closed above $13 on Wednesday, for the first time in two years. Shares are up almost 70 percent since last May.
In that period, the bank has settled a number of large-scale lawsuits, including a $2.4 billion deal to end a shareholder suit over the acquisition of Merrill Lynch, and a $10 billion payment to Fannie Mae to end a dispute over bad loans sold to the government-sponsored mortgage giant. Bank of America has also continued to cut jobs and expenses. The bank eliminated about 5 percent of its jobs in 2012.
About 200 people filed in to the meeting room in the Charlotte Marriott Center City on Trade Street. The business component of the meeting offered few surprises: All of the bank’s directors were elected with more than 96 percent of the vote, and all shareholder proposals were voted down. The closest vote, at 63 percent against, was a proposal that would have required the bank to fully disclose its political spending.
But like last year, Moynihan faced a torrent of questions and criticism about the environmental record of the bank’s clients, primarily coal companies. Environmental questions were raised by 27 of the 41 people who spoke up at the meeting.
At one point, Moynihan stood largely expressionless as a Boston rabbi sang what she described as an “Appalachian spiritual” in a plea for the bank to stop funding coal companies.
After the first question on the topic, Moynihan acknowledged the “public debate” over coal and climate change, and said the bank makes decisions based on a “rational view” of what its clients do. He also asked global technology and operations executive Cathy Bessant to run through the bank’s $70 billion total commitment to funding green energy and other environmental projects over the next 10 years.
Servicing and dividends
Several questioners also brought up the bank’s ongoing mortgage servicing issues. Just this week, New York Attorney General Eric Schneiderman announced plans to sue Bank of America and Wells Fargo over alleged violations of last year’s multistate $25 billion mortgage settlement.
Shareholders, however, again rejected a proposal to conduct an external audit on the bank’s mortgage lending operations.
Another handful of questions centered on the bank’s dividend. Some shareholders said they bought the stock to provide income in retirement at times when dividends were generous. As recently as 2007, Bank of America’s dividend stood at 32 cents, but since the financial crisis it’s been stuck at a penny a share.
Bank of America received approval this year from the Federal Reserve to buy back stock, but the bank did not ask for a dividend increase. Moynihan said Wednesday that executives decided to go that route because they felt the stock traded at a discount to its true value.
Shareholder Alan Goozner of Charlotte, who sat in the back of the room at Wednesday’s meeting, said an elderly relative, also a shareholder, could especially use a dividend increase. She is in a retirement community, he said in an interview, and if the bank’s dividend were larger, she might not end up being a “pauper.”
But the nearly two-hour back and forth was also notable for what wasn’t discussed: the Occupy Wall Street movement, executive pay, the “99 percent.” The bank’s annual measure to decide on executive pay passed with 93 percent approval.
Meanwhile, protesters who gathered in uptown Charlotte for the shareholders meeting staged demonstrations that had much lower attendance than last year.
Maj. Jeff Estes, of the Charlotte-Mecklenburg Police Department, on Wednesday estimated that the event drew, at most, 40 protesters. “And that’s generous,” he said.
Last year about 600 protesters gathered in uptown Charlotte, resulting in blocked streets and six arrests. Estes said no protesters were arrested Wednesday.
Inside, the atmosphere was also considerably more amicable than last year. Holliday, the board chairman, asked the audience Wednesday whether they’d seen the bank’s new commercials, and drew laughter when he quipped: “If you haven’t, we sure wasted a lot of money.”
And the bank changed tactics a bit from the 2012 meeting, when executives fielded numerous questions about individual financial problems. This time around, the bank set up a room next door filled with employees ready to address specific situations. The bank also met privately with several environmental activist groups in the weeks leading up to the meeting.
Dunn: 704-358-5235; Twitter: @andrew_dunn
The Charlotte Observer welcomes your comments on news of the day. The more voices engaged in conversation, the better for us all, but do keep it civil. Please refrain from profanity, obscenity, spam, name-calling or attacking others for their views.
Have a news tip? You can send it to a local news editor; email email@example.com to send us your tip - or - consider joining the Public Insight Network and become a source for The Charlotte Observer.Read moreRead less