Moynihan Said to Outline BofA's Recovery at First Investor Day Since 2007
Bank of America Corp CEO Brian T. Moynihan
Jim R. Bounds/Bloomberg
Bank of America Corp. Chief Executive Officer Brian T. Moynihan will tell investors tomorrow what profits to expect as the U.S. economy stabilizes and detail progress on his vow to increase shareholder equity, said two people with knowledge of his plans.
Bank of America Corp. Chief Executive Officer Brian T. Moynihan will tell investors tomorrow what profits to expect as the U.S. economy stabilizes and detail progress on his vow to increase shareholder equity, said two people with knowledge of his plans. Photographer: Jim R. Bounds/Bloomberg
March 7 (Bloomberg) -- Paul Miller, head of financial-services research at FBR Capital Markets, talks about the growth prospects for Bank of America Corp. and the banking industry. Bank of America, the biggest U.S. lender by assets, is scheduled to hold its first investor conference since 2007 tomorrow in New York. Miller talks with Betty Liu, Jon Erlichman and Sheila Dharmarajan on Bloomberg Television's "In the Loop." (Source: Bloomberg)
Bank of America Corp. (BAC) Chief Executive Officer Brian T. Moynihan will tell investors tomorrow what profits to expect as the U.S. economy stabilizes and detail progress on his vow to increase shareholder equity, said two people with knowledge of his plans.
The bank’s guidance to investors will include credit losses and estimates for return on tangible equity, a measure of shareholder returns that excludes goodwill, said the people, who declined to be identified because the plans aren’t public. The biggest U.S. lender by assets is scheduled to hold its first investor conference since 2007 tomorrow in New York.
“The last two or three years have been anything but normal for Bank of America, and with indications we’re entering into a better environment, the company wants to give a sense of how its businesses ought to perform,” said David Havens, a managing director at Nomura Holdings Inc. “The disappointment that could occur is that the presentation will reflect the new reality” of lowered returns after U.S. bank regulations.
Bank of America has lagged behind competitors including JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) in putting the financial crisis to rest, with the stock dropping 16 percent in the past year of New York trading. Moynihan, 51, has called 2010 a “repair and rebuilding year” for the Charlotte, North Carolina-based firm after $12.4 billion in writedowns of credit- card and mortgage units wiped out profit.
Beyond the Fires
Managers want to signal that the bank is “beyond the ‘putting out fires’ phase of its turnaround, and beginning to focus more solidly on adjusting its business strategies” to the current economic environment, John McDonald, a Sanford C. Bernstein & Co. analyst, said in a March 4 research note. He has an “outperform” rating on Bank of America.
The company slipped 8 cents to $14.04 at 11:43 a.m. in New York Stock Exchange composite trading.
Buyers and insurers of mortgage bonds have demanded that the firm repurchase loans that may have been created with faulty information. The bank said it mostly resolved requests from U.S.-owned mortgage buyers Fannie Mae and Freddie Mac after spending about $3 billion late last year. Other claims could cost as much as $7 billion to $10 billion over several years.
“We’ll continue to drive towards delivering shareholder returns by continuing to grow our tangible value per share as we materialize our recovery,” Moynihan said in a January conference call.
Borrowers Repay
Bank of America may benefit after the U.S. jobless rate fell to 8.9 percent last month, the lowest in almost two years, as employers added 192,000 jobs. That’s likely to help borrowers keep up with payments and in turn curtail defaults at Bank of America, which said in its quarterly performance update that more than 1 million home-loan customers have been in distress. with 4.1 percent of balances at least a month past due in January, compared with 5.97 percent a year earlier, according to Moody’s Investors Service.
Moynihan, who took over from predecessor Kenneth D. Lewis at the start of last year, has called the bank a mirror to the U.S. economy. Lewis spent about $130 billion in acquisitions to create a company with leading positions in deposits, credit cards, home loans and wealth management.
In 2007, during Bank of America’s last investor day conference, Lewis said he didn’t need takeover deals to spur growth. The credit crisis months later gave him opportunities to buy Countrywide Financial Corp. and Merrill Lynch & Co.
List of Speakers
Billionaire Warren Buffett said Lewis overpaid for Merrill, and Buffett’s Berkshire Hathaway Inc. (BRK/A) sold its remaining 5 million shares in Bank of America in the fourth quarter. Meanwhile, Bruce Berkowitz of Fairholme Capital Management LLC, who was named Morningstar Inc.’s domestic stock-fund manager of the decade last year, added to his stake and had more than 92 million shares at yearend.
Moynihan probably will lead the presentation tomorrow, followed by deputies including Joe Price, who runs consumer banking and credit-card operations; David Darnell, in charge of commercial lending; and Thomas Montag, president of the investment bank and trading operations, said one of the people. Terry Laughlin, who was promoted last month to head a new unit managing foreclosures and defaulted loans, also will speak, the person said.
Bank of America still faces pressure from bond investors and regulators, mostly stemming from the 2008 acquisition of Countrywide. The lender said last month that it may face “material fines” from government probes into possible irregularities in foreclosure processes. Legal costs may be as much as $1.5 billion higher than what the bank had set aside.
The firm has also said that new regulations limiting debit- card and overdraft fees would reduce revenue.
To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net
To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.
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