Ken Lewis has been taking a lot of heat lately over the recent mergers with Countrywide Home Loans and Merrill Lynch. Finally shareholders got what they wanted and Ken Lewis is out as chairman.
On Wednesday, Bank of America held its 209 Annual Meeting of Stockholders at the Belk Theatre of the Blumenthal Performing Arts Center in Charlotte, North Carolina, Several thousand shareholders, including many Bank of America associates, attended to hear CEO, Ken Lewis and CFO Joe Price report on the state of the company, and to vote on the election of the company's board of directors and 11 proposals from management, individual shareholders and shareholder groups.
At the conclusion of the shareholders voting, all of the company's 18 directors were elected. Two management proposals--one related to the ratification of the bank's auditors and the other related to revised policy on executive compensation--both passed. One shareholder proposal requiring the separation of the roles of chairman of the board of directors and chief executive officer passed.
Ken Lewis remains chief executive officer and president and will continue to serve on the board of directors. The board of elected Walter Massey as Chairman. Massey, 70, is president emeritus of Morehouse College. He has been a director of Bank of America sine 1998. Seven other proposals submitted by individual shareholders or shareholders groups did not pass.
In his remarks, Lewis complimented associates from the former Countrywide organization and Merrill Lynch, saying, "In the first quarter, what we saw was the precise rationale for acquiring Countrywide and Merrill Lynch when we did. they are two of the most important reasons Bank of America is the most profitable financial services company in the Unites States so far this year. Today, I can state without reservation that Countrywide and Merrill Lynch are not mistakes to be regretted. both are looking more and more like successes to be celebrated."
Citing the company's recently released Lending & Investing report, Lewis highlighted some of the key actions the company is taking to help drive economic recovery. "While I've seen many reports saying that overall bank lending is falling fast," Lewis said, "Bank of America actually lent more money in the first quarter than we did in the fourth--$183 billion." He also talked about the company's work in mortgage modification, community development, philanthropy and environmental sustainability.
Lewis also talked about his vision for Bank of America. "Our goal has been to build a diversified financial services company that can offer customers and clients of all sizes a wide variety of financial services that they can use to manage their financial lives," Lewis said, "and create value by delivering these products and services as a single relationship."
"We are building this company and managing for he long term," concluded Lewis, "I continue to believe we ave built the best financial company in the industry, and that our results over the long term will bear that out."
CFO J Price reported that Bank of America earned $4 billion in 2008 despite great economic challenges "because of our strong market leading positions and customer and client relationships, achieved through the tireless hard work of our dedicated associates around the globe."
Price discussed steps taken to improve the company's core strengths position and noted that last year's acquisitions of Countrywide and Merrill Lynch completed the strategic build out of the franchise. "The two most recent acquisitions have also enhanced the diversity of our earnings, as the first quarter results show," he said.
Taking a broader view, Price reviewed the company's record of revenue generation. He compared recent pre-tax, pre-provision quarterly income with quarterly provision expense, saying "this data illustrates the resources we have to manage through this down cycle." He also compares the company's earnings over the past five years with that of peers, noting that Bank of America's earning for the previous five years exceeded the nearest competitor by more than $20 billion.
Price concluded with an illustration of what management believes the company will produce during more normal times. "We estimate that the baseline potential our company should produce under more normal economic conditions is $30 billion in net income. This is not a forecast...but it gives you a perspective on the sheer power of our company."
"As demonstrated by our history of revenue and earnings, and despite today's challenges, the model we have built is working," added Price, "and we expect it to be even more powerful in the future."
This can be a very exciting time for Bank of America. I am a big fan and have seen them continue to get through some rough patches only to be stronger and better each time. This time will be know different. Can't wait to see how things turn out in the long term.
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