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The Best Kept Secret at Bank of America

Bank of America (NYSE: BAC  ) is one of the most well-known and most watched banks in the country. Yet there is one thing nearly no one knows about it.

What is it you ask?

Well it turns out, that's not the best question to ask. As the real question isn't what, but who.

The impressive leader
Brian Moynihan may not be a secret necessarily, but what often goes undiscussed is the impressive way he has led Bank of America over the last four and a half years.

Brian Moynihan. Source: Bank of America.

Moynihan -- unlike most headline grabbing CEOs like Warren Buffett, Elon Musk, Mark Zuckerberg, or Jeff Bezos -- is not the most inspiring of speakers. He is direct, and to the point, and often speaks quickly. A recent Forbes article on him noted, "[c]olleagues describe Moynihan as a hard worker who is smart but unassuming and has a tendency to speak too fast."

Yet when he was named CEO in December of 2009 -- he officially started in January 2010 -- questions swirled about the future of Bank of America. Although its stock had rebounded from the depths it saw in the spring of that year, it had still fallen by more than 60% since the beginning of 2008.

But when Moynihan was tapped, Bank of America was the largest bank in country, and it had undergone staggering changes over the previous 20 years. His predecessors -- Hugh McColl and Ken Lewis -- were two of the most aggressive acquisition hunters and bought other banks at a somewhat dizzying pace. Thanks to numerous massive acquisitions, Bank of America had grown on average by 17% a year since 1990:

Source: S&P CapIQ

And while the last four and a half years with Moynihan atop Bank of America has been anything but smooth, his remark from when he was named CEO should give investors reason for great confidence in his leadership of the bank thus far.

The surprisingly simple task
In the press release announcing he would succeed Ken Lewis, Moynihan said:

What we need to do now is very simple. We need to execute. This company has a long tradition of operational excellence and strong execution. My goal is to refocus our efforts and attention on those core capabilities that will make us the best financial services firm in the world.

Although it isn't a direct admission, it's not difficult to think Moynihan would've willingly admitted Bank of America had grown too big for its own good. And the troubles which have assailed it since then are only further proof of that.

But the key word in Moynihan's remarks is "simple," as little by little, that is what Bank of America under Moynihan has been doing, simplifying itself. It has shrunk by more than $100 billion and has sold more than $70 billion of its non-core assets. It has dramatically reduced its branches, from more than 6,000 at the end of 2009 to 5,095 at the end of the first quarter. And it has cut its checking account options from 70 to three.

Nothing has or will go quickly for Bank of America and Brian Moynihan -- it has more than $2 trillion in assets after all -- but this dramatic goal of refocusing the bank to have its attention on its "core capabilities" has slowly but surely been executed over recent years.

After all, its wealth management, investment banking, and consumer banking operations have all had such dramatic improvement. They've refocused, simplified, and are executing on those goals. This execution on its core businesses is why fellow Fool Jordan Wathen notes its stock has 25% upside.

Say what you will about Bank of America and Brian Moynihan, but the reality is, he has done a phenomenal job executing on the tasks he set out to accomplish. While there may be moments of trouble ahead for the bank for the messes he overtook, they will be temporary and will pass, and Moynihan has placed it in the position to succeed.

Bank of America + Apple? This device makes it possible.
People may hate Bank of America, but they love Apple. And soon, they two will be united. You see, Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its destined to change everything from banking to health care. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here

Read/Post Comments (5) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 28, 2014, at 5:02 PM, Rifleman3006 wrote:

    Moynihan is the right man for the job. Lewis was an egotistical idiot, plain and simple. It's a shame he walked away with his vast wealth. Glad his ego has been trounced.

  • Report this Comment On June 28, 2014, at 8:33 PM, JustTheFacts wrote:

    If Moynihan has done such a great job, why is BAC still languishing 70% below its pre-crisis levels? Of America's 4 largest banks, only CitiGroup has done worse, at a 90 percent loss from their pre-crisis level. Both JPM and WFC have fully recovered from the Great Panic and now trade from 20 to 40 percent ABOVE where they were before the meltdown. But BAC and C haven't followed.

    So does this mean that BAC (and C) have been artificially held back and could explode at any time with a sudden 500 to 1,000 percent increase in their share prices?

    Or does it mean that they were just fundamentally crippled by the panic, and will NEVER recover?

  • Report this Comment On June 28, 2014, at 9:41 PM, Rifleman3006 wrote:

    Once the lawsuits are over, it will go much higher, not 500% as there are a lot more outstanding shares than pre-crisis. This does not apply to JPM and WFC. But I see 25 plus in a couple of years easily.

  • Report this Comment On June 28, 2014, at 10:05 PM, funfundvierzig wrote:

    When Brian Moynihan became CEO January 2010, BAC opened at 15. Flash forward to Friday, June 27, 2014. After 4 1/2 years later with his sidekick, Chairman of the Board of Directors, Chad O. Holliday, Jr. (whom veteran bank analyst, Mike Mayo, accurately described as "a figurehead with no banking experience") BAC is still 15.

    The stock has gone rigorously nowhere! ...funfun..

  • Report this Comment On June 29, 2014, at 9:34 PM, Rifleman3006 wrote:

    yeah funfun and you are still unemployed - lol.

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Patrick Morris

After a few stints in banking and corporate finance, Patrick joined the Motley Fool as a writer covering the financial sector. He's scaled back his everyday writing a bit, but he's always happy to opine on the latest headline news surrounding Berkshire Hathaway, Warren Buffett and all things personal finance.

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8/31/2015 11:14 AM
BAC $16.22 Down -0.14 -0.86%
Bank of America CAPS Rating: ****