2010 BofA shareholder meeting mild compared to '09
Shares of Bank of America ended up 31 cents yesterday after the bank held its annual shareholder meeting in Charlotte. Some 50 or so people chanted "Bail out the people, not the banks! Bail out the people not the banks!" on the sidewalk outside the Blumenthal Performing Arts Center. A year ago, anti-big-bank bailout sentiment dominated the Bank of America annual meeting, inside and out.
Yesterday, it was relegated mainly to the fringe. Shareholders headed inside the meeting were in much better spirits. Dale Sisel said he's "feeling pretty good" about his investment in Bank of America now. When he came down from Winston Salem for the shareholder meeting last year, he says things looked pretty bleak: His stock - once worth more than $50 - was down to about $8.
Bank of America had just taken $45 billion in bailout funds and was reporting big losses after acquiring Merrill Lynch. Today Sisel's investment is worth about $17 a share and he's relieved that Bank of America seems to be on the right track and doing well with new management in a difficult environment. "I'm quite optimistic," says Sisel.
At the Bank of America shareholder meeting on Wednesday, CEO Brian Moynihan had a clear advantage over his predecessor Ken Lewis. The auditorium was half empty, rather than packed to the rafters with angry investors and anxious employees. And this year Moynihan had good news to share: The bank reported a profit of nearly $3 billion for the first quarter of 2010.
Bank of America's mortgage businesses also gave him a chance to brag. "In the fourth quarter last year people were criticizing your company and our management team for not getting after home modifications," acknowledged Moynihan. "In the course of a quarter we've gone from being at the bottom of the pack to the top of the pack." Moynihan kept referring to the bank as "your company." He seemed to be reminding shareholders of the bank's efforts to listen and respond to them.
Bank of America has worked hard over the last six months to improve its image, publishing clarity commitments for its customers and dropping unpopular overdraft fees on debit cards. Moynihan took two-hours of questions from shareholders. Dividends came up early on. "If this is really a new day for Bank of America . . . restore a respectable dividend to shareholders," pled one shareholder. "A penny a share is essentially insulting."
Many shareholders in the room bought Bank of America stock because it paid a handsome annual dividend of more than $2 a share. But in 2008, the dividend dropped to a penny. Moynihan says it won't rise until the bank has several more quarters of profitability and it becomes clear the economic recovery will hold.
Several times during the meeting, Moynihan was asked about one of his competitors - Goldman Sachs. That investment bank is being sued by the SEC and skewered by Congress for allegedly misleading customers so it could bet against the housing market and make a profit. Shareholders want to know if Bank of America could be in the same trouble. "We're comfortable and we see nothing that concerns us," said Moynihan. "We haven't seen anything yet as we've looked at all the activity of the legacy companies."
Moynihan didn't elaborate before moving quickly on to the next question. His responses were terse, but not unkind. The audience was, after all, being kind to him. There were a fair share of community activist groups complaining about the ongoing foreclosure crisis and Bank of America's lending practices. But there were an equal number of similar groups offering praise for Bank of America's decision to stop charging penalty fees on debit card transaction.
"Today I come in a role that I don't often do which is to deliver praise to Bank of America," said Martin Eakes, executive director of the Center for Responsible Lending.
Shortly after the meeting, the bank's board elected newcomer and former DuPont CEO Chad Holliday as their chairman. Outgoing board chairman Walter Massey held the position for just one year, after angry shareholders stripped the seat from former CEO Ken Lewis. Massey referenced that tense period in his farewell comments. "It's been a great experience and one I will never, ever forget. . . Especially last year," Massey quipped as the audience laughed. Bank of America's shareholders aren't likely to forget the last year either.