BofA Shareholder Letter: Swing and a Miss

| About: Bank of (BAC)
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Have you seen the "six operating principles" for Bank of America (NYSE:BAC) that Brian Moynihan has laid out in his new letter to shareholders? Have a gander:

    • Be a customer-driven company.

    • Build a fortress balance sheet.

    • Pursue operational excellence and manage risk well.

    • Deliver on our shareholder return model.

Still awake? Hang on, only two to go:

    • Clean up legacy issues related to the economic downturn, primarily in the mortgage business.

    • Be the best place for people to work.

And on the seventh operating principle, he rested. I don’t mean to second-guess the spirit of high-mindedness Moynihan is trying to instill among his employees (sorry, "teammates") down there in Charlotte, but if a hedge fund manager in from the planet Stevie read those six items above above, he’d have no clue that Bank of America is only two years on from a near-death experience, and is still operating under close supervision of the federal government. He’d think instead he’d found something from the CEO of First Bank of Plain Vanilla. Which BofA hasn’t been for a long, long, time. Brian, you can do better!

You’ll recall that I’m a member of that small circle of investors that actually takes CEO letters seriously. It’s one thing to go through the numbers in the back of the annual report. We spend a lot of time on them. But that letter in the front is a chance to crawl into the CEO’s head to find out what, after much reflection, he’s actually thinking about the business.

Based on this new BofA letter, Brian Moynihan isn’t thinking much of anything at all. Here, for instance, is what he has to say right up in the front, in paragraph three, under the heading "Our Vision and Strategy."

Our vision is for Bank of America to be the world’s finest financial services company. ... I firmly believe that we have all the businesses and capabilities in place to meet the core financial needs of customers and clients more effectively than any other company.

Oh, come off it. Put aside the fact that Moynihan can’t possibly think—no executive can—that his company, by itself, can do a better job serving every customer, in every business line, every time, than any combination of competitors can. That’s ridiculous. But Moynihan seems to think he can convince his shareholders that he believes that. Every CEO wants his company to have a certain type of investor base. Brian Moynihan seems to want BofA’s to be made up entirely of morons.

And BofA wants to be the "world’s finest financial services company?" Really? When I first read that — and you’ll forgive me if this has scary connotations — I couldn’t help but remember how Enron used to bill itself as "the world’s greatest company." It was an aspiration so broad as to be, as we now know, utterly meaningless. So when Moynihan says now that his goal for BofA is to be the world’s greatest financial services company, he might as well be saying he has no goals for the company at all. Wonderful.

The whole letter, all six single-spaced pages, is like that — crammed with platitudes, clichés, empty ideas, and big-banker jargon. When I was done, I didn’t have any better idea of what Moynihan’s plans for BofA are than I did when I started. That’s a shame. Bank of America has just been through the four most tumultuous years in its history. The company has a new management team at the start of a fresh cycle, and has an opportunity to remake itself however it likes. I would have been very, very interested to read Moynihan’s thoughts on where he plans to take BofA, and what the company might look like in, say, five years. Instead he gave shareholders a generic shareholder letter that could have been put out by any bank in virtually any year since the invention of the OCR reader. It’s pathetic — and, for BofA shareholders, not an encouraging omen of things to come.

Brian Moynihan is a very bright and capable guy. His letter this year is surely a one-off. I can only hope and assume that he’ll put more thought and effort into letter to shareholders next year, and in the years to come after that.

What do you think? Let me know!