“Come to Prince William County, and I will show you disaster,’’ said Ellis.
Losses and litigation related to foreclosures and poorly written mortgages have haunted Bank of America for several quarters. In its latest quarter, the bank’s income dropped 39 percent on higher costs related to mortgages and legal expenses. At the end of the first quarter, the bank had $2 billion of foreclosed properties on its book, and its customers were late by 90 days or more on $24 billion of its loans.
Moynihan tried to separate the rest of the bank’s business from its mortgage woes. In his address to shareholders at the start of the meeting, he described the company as being made up of two stories, with the mortgage business on one side and all its other business units on the other.
“The power of the franchise is held back by the mortgage challenges we face,’’ he said.
The bank’s stock is one of the worst performers of the S&P 500 index this year. Recently, the stock slid after the Federal Reserve rejected the bank’s capital plan and its request for a dividend increase.
Bank of America was the only bank among the country’s four largest that did not pass a stress test from the Fed. The central bank examined the 19 largest banks in the country to see if they were strong enough to withstand another economic downturn. Bank of America will submit a revised plan later this year.
Some shareholders want the bank to scrutinize itself more closely. Michael Garland, who was representing several large public pension funds, said he had written to Bank of America’s audit committee asking that it conduct an independent review of mortgages and foreclosures.
Garland said that audit committees of other banks responded soon after he sent them a similar letter in January. He said was disappointed that there had been no response from Bank of America’s audit committee until just five days before the annual meeting.
