CEO Leads Recovery At Bank of America -- WSJ
August 20 2018 - 3:02AM
Dow Jones News
By Rachel Louise Ensign
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 20, 2018).
A decade after the financial crisis, The Wall Street Journal has
checked in on dozens of the bankers, government officials, chief
executives, hedge-fund managers and others who left a mark on that
period to find out what they are doing now. Today, we spotlight
Bank of America CEO Brian Moynihan.
When Brian Moynihan took on the job of chief executive of Bank
of America Corp. in 2010, the bank's very existence seemed
uncertain. After almost nine years in the role, he has lifted its
stock price and earned the praise of Warren Buffett.
The process took years. Mr. Moynihan, 58 years old, got the top
role after CEO Kenneth Lewis unexpectedly announced his retirement
in fall 2009. During that period, Bank of America faced major
financial problems following acquisitions of Countrywide Financial
Corp. and Merrill Lynch & Co. To stay afloat, the bank had to
take $45 billion from the government.
With the bailout funds paid back, Mr. Moynihan oversaw a plan to
stabilize the lender and try to shield it from similar damage in a
future crisis. That strategy involved shedding riskier businesses
and expanding through conservative lending.
For a long time, though, that turnaround plan was overshadowed
by multibillion-dollar fines and other missteps, like when the bank
in 2014 had to shelve a plan to buy back shares and boost its
dividend for the first time in years after finding a $4 billion
error in its capital calculations.
Eventually, the bank was able to cut costs and boost profits
through strategies like closing around 1,600 branches while
strategically expanding in big cities. Around 2015, the bank turned
a corner "numerically" and "emotionally," Mr. Moynihan said this
year.
An Ohio native, the low-key Mr. Moynihan joined Bank of America
through its 2004 acquisition of Boston-based FleetBoston Financial
Corp. He previously held a number of roles at the bank, including
running consumer and small-business banking.
After Donald Trump's surprise 2016 election, bank stocks broadly
jumped. Bank of America shares surged 74% between then and the end
of 2017.
For the full year of 2017, the bank posted a $21.1 billion
profit, excluding an adjustment from the tax cut, roughly matching
the bank's all-time profit record from 2006. The bank issued
millions of new shares during the crisis, however, so its per-share
earnings remain far below where they were precrisis. Likewise its
shares, unlike those of competitors such as JPMorgan Chase &
Co. and Wells Fargo & Co., remain below precrisis levels.
The bank has also gotten approval to continue boosting buybacks
and its dividend. Mr. Buffett, whose Berkshire Hathaway Inc. threw
the bank a lifeline with a 2011 investment and now is its largest
shareholder, has publicly praised Mr. Moynihan.
"Bank of America has done a sensational job under Brian
Moynihan," Mr. Buffett said in a television interview last year.
"Brian had all kinds of problems when he came in, they were not of
his own doing...He just set out step-by-step to bring the bank
back."
Mr. Moynihan has shown no indication he plans to leave the role
anytime soon. "I've got some room to run, I hope," he said earlier
this year.
Write to Rachel Louise Ensign at rachel.ensign@wsj.com
(END) Dow Jones Newswires
August 20, 2018 02:47 ET (06:47 GMT)
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