Foreclosures and home mortgage modifications took center stage at Bank of America Corp.'s annual meeting Wednesday.
Outside the headquarters of the nation's largest bank, protesters held signs and gave testimonials about their own foreclosure experiences. At the meeting, which was held inside the bank's new 32-story building located adjacent to its headquarters, shareholders confronted CEO Brian Moynihan about mortgage woes in their communities.
Reverend Clyde Ellis, a pastor from Virginia, said Bank of America should take responsibility for its role in the foreclosure crisis. Ellis invited Moynihan to visit Prince William County in Virginia to see the damage that foreclosures have caused, including families that have lost homes and empty homes.
"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 total loans, which included commercial and residential properties.
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.
BofA was the only bank among the country's four largest that didn't 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.
Moynihan said the bank will pay dividends once it resolves more of its mortgage issues and submits a plan that is acceptable to regulators.
Some shareholders want the bank to scrutinize itself more closely. Michael Garland, who was representing several large public pension funds at the meeting, said he had written to Bank of America's audit committee asking that it conduct an independent review of mortgages and foreclosures to show that they conform with the laws.
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.
"If this is your response to shareholders with a $1.3 billion stake in the company, I can only imagine how you treat your residential mortgage customers," said Garland, who was also representing the New York City Comptroller's Office, which oversees the public pension funds of New York. The New York Comptroller had put forth a shareholder proposal for the bank to conduct the independent review. The plan didn't get enough votes to pass on Wednesday.
The annual shareholder meeting was held in a brand-new auditorium with red velvet seats in its 32-story Bank of America tower, which opened last year.