5 Things Brian Moynihan Wants Bank of America Shareholders to Know
After Bank of America (NYSE: BAC) reported second-quarter earnings on Tuesday, its executives held a conference call with analysts to walk through the results. The call covered a lot of ground, but here are five things I found particularly noteworthy about what Chairman and CEO Brian Moynihan had to say.
1. Responsible growth
Bank of America's mantra over the past few years has been all about responsible growth.
Moynihan introduced the term in his 2014 shareholder letter. He then dedicated his letter the following year to digging into the four pillars of responsible growth:
- Growing and winning in the market.
- Growing with a customer-focused strategy.
- Growing within the bank's risk framework.
- Growing in a sustainable manner.
This remains Bank of America's focus today, as Moynihan made clear on the bank's second-quarter conference call:
2. Capital return
One of Moynihan's objectives since becoming CEO in 2010 has been to "get back most of the [7 billion] shares we issued in the crisis, that caused all the dilution," as he told Fortune's Shawn Tully in 2011.
Moynihan doubled down on this goal in his latest shareholder letter, saying in relation to the financial crisis that "now that our company is stronger, we are focused on reducing the dilution and increasing the dividend."
Bank of America made good on its promise following this year's stress tests. Thanks to its performance on the tests, the North Carolina-based bank was given the green light from regulators to increase its dividend and repurchase $12 billion worth of stock between now and the end of the second quarter of next year.
As Moynihan noted on the call:
3. Digital banking
Bank of America has consistently been on the leading edge of digital banking, with its mobile-banking app in particular becoming especially popular.
On Tuesday's call, Moynihan shared a number of metrics that show just how significant its progress on this front has been:
4. Regulations
Most conference calls with bank executives nowadays include some conversation about the likelihood that regulations in the bank industry will be eased, as Donald Trump vowed on the campaign trail. Bank of America's latest call was no exception.
In response to an analyst's question about changes that would be most helpful to Bank of America, Moynihan largely dodged the question:
For the record, at an industry conference last year, Moynihan intimated that his top priority on the regulatory front was regaining discretion over capital distributions, which all big banks lost as a part of the stress testing process. As Moynihan noted at the time:
5. Branches
Last but not least, Moynihan spent a fair amount of time talking about Bank of America's branch network. Given the growing popularity of digital banking, combined with the fact that large branch networks are expensive to operate, there's a need to balance consumers' desire to have access to branches against economic realities.
Here was Moynihan's take on this:
Despite these investments, Moynihan told analysts that they should expect the bank to close roughly 100 branches a year.
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John Maxfield owns shares of Bank of America. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.