Bank of America exceeded $15.06 yesterday, the price on the day before Brian T. Moynihan became chief executive officer almost four years ago.
The second-biggest U.S. lender rose 1.9 percent to close at $15.20 in New York, bringing this year's gain to 31 percent. That follows last year's 109 percent advance, the best in the Dow Jones Industrial Average, as Moynihan eased investor concern that mortgage costs would force the bank to issue more stock.
Before taking over in January 2010, Moynihan, 54, promised the Charlotte, North Carolina-based bank's board that he'd simplify and shrink the company after his predecessor, Kenneth D. Lewis, bought Merrill Lynch & Co. and Countrywide Financial Corp. Moynihan has sold more than $60 billion of assets, boosted capital and settled $50 billion in mortgage claims.
"He's getting back to the starting line," David Konrad, Macquarie Group Ltd.'s head of U.S. bank research, said in a telephone interview. "He's done a good job on the legal side getting us more comfortable with what's left. Now the more challenging part is where you have to grow core earnings, not just shrink and eliminate risk."
The stock remains below its best levels for Moynihan's tenure, including the $19.48 close on April 15, 2010.
Moynihan's focus has been increasing revenue and cutting costs. Shares have climbed amid revenue that rose 4.3 percent to $67.5 billion in the first nine months of the year and expenses that fell 3.4 percent to $51.9 billion in that time.
"It's a bit of a milestone, they're getting past some of their legacy issues and are able to focus on growing the company," says Jonathan Finger, whose family-owned investment firm, Finger Interests Ltd., owns 1.1 million Bank of America shares. "We certainly hoped it would've happened faster."
Bank of America's recovery was delayed by costs from defective Countrywide mortgages created during the housing boom. Moynihan secured settlements with federal and state regulators, as well as Fannie Mae and Freddie Mac, the two U.S.-owned housing firms, private investors and bond insurers.
Shares of the bank, which are about breakeven during Moynihan's tenure, still underperformed other financial firms. The 24-company KBW Bank Index surged 55 percent since the start of 2010. JPMorgan Chase & Co., the largest U.S. lender by assets, rose 35 percent and Wells Fargo & Co., the biggest mortgage lender, rose 61 percent.
A low point for Moynihan came in December 2011, when Bank of America shares dipped below $5 on concerns the firm needed to sell new stock to replenish capital depleted by mortgage costs. The CEO lost credibility after initially failing to have a firm grasp on Countrywide-related expenses, analysts including Paul Miller of FBR Capital Markets Corp. said that year.
"I don't know how many human beings could have withstood all the legal issues and everything else he dealt with," said Greg Donaldson, chairman of Donaldson Capital Management, an Evansville, Indiana-based investment firm that oversees $750 million in assets. "Moynihan walked through the valley of the shadow of death, and he's come out on the other side."