Who Is Scaring Bank of America’s CEO?
Bank of America’s (NYSE:BAC) fourth-quarter results had a clear message: It still pays to be in banking. In the fourth quarter, not only did net income jump 369 percent to $3.4 billion, but the bank posted a dramatic 84.8 percent decline in provisions for credit losses, a 48.4 percent decline in net charge-offs, and the net charge-off ratio — the rate at which debt has to be purged from a bank’s books — declined from 1.4 percent to 0.68 percent.
But while those gains show that the institution is strengthening its financial position, despite the progress, Bank of America still has whole host of problems to face, ranging from increased regulatory controls to lingering litigation to rising competition from its smaller commercial banking peers.
That larger American banks are concerned smaller rivals will be able to entice their customers away became obvious during a November panel discussion known as the “chairmen’s panel.” With Joe Walsh of McKinsey & Co.’s Financial Regulation practice as moderator, Bank of America CEO Brian Moynihan, U.S. Bancorp (NYSE:UBS) CEO Richard Davis, and PNC Financial (NYSE:PNC) CEO William Demchak gathered to discuss “emerging trends in the banking industry.”
When talking about the challenges of meeting the needs of customers, Walsh asked Moynihan to say who he was most worried would steal his customers. Turning to his right, he said U.S. Bancorp’s Davis, per Bloomberg’s video coverage of the event. Demchak of PNC Financial Services added, “Yeah, I’d say Richard.” Davis’s firm has surpassed its larger rivals in terms of stock market valuation.