Bank of America CEO
Raised along the banks of the Ohio River, in a small town called Marietta, Bank of America CEO Brian Moynihan shared his modest boyhood home with seven brothers and sisters. This branch of the Moynihan clan can trace their ancestry as far back as the 1850s, when they first emigrated from Ireland to the North American continent. Both of Brian’s parents were brought up in upstate New York, where the Irish part of their families originally had farms and then opened stores.
His grandfather was a lawyer, however, his dad earned a Ph.D. and made a decent living as a research chemist for Dupont. Figuring out creative ways to get ahead only came naturally for Brian, especially considering he was born third to last among eight total children. “Everything was a competition just because it was,” he shares. “Who had to do the dishes was a competition that probably taught me how to make arguments in a way nobody ever thought of.”
Hand me down’s were certain destiny in the Moynihan household, Brian can remember the four oldest brothers passing down a single set of Christmas sweaters, which gradually made their way through the boys. “I had the smallest one,” he revealed to Brown Alumni Magazine. “and then I grew into the next and the next and the next. I had to wear them all.”
Nonetheless, having so many siblings meant there was always someone around to play soccer, basketball, chess, or Ping-Pong, in other words, to compete with. “You had a lot of people who were smart and knew what they were doing,” he says, “and didn’t mind winning.”
Marietta High School
Although a good portion of his brothers and sisters were fascinated by the scientific field, which could be attributed to an abundance of encouragement from their father, Brian excelled across social spectrums. He was as involved as any student at Marietta high school could be, an athlete on both the football and baseball teams, a track and field runner, a linguist in french club, and with regards to his stellar academic performance, a member of the national honors society.
Moynihan’s track relay squad embodied quite the success story, they competed in 63 races together and won all but one of them. “It was a 4×2 relay, or half-mile relay in the old days because we didn’t have meters back then, but people had bells on their toes and all the relay teams could hear each other coming,” he said while recounting that lone loss on the Corporate Competitor podcast. “It’s one thing to be run down by somebody when you can’t hear, it’s another thing when you felt like the cat was coming to get you with the bell around his neck – you could hear them catching you. Which sped you up but they were good and they beat us.”
In the end, athletics represented a real-world arena where many of his most endearing leadership qualities were able to take shape and shine through, namely his incredible work ethic, commitment to preparation, and ability to foster constructive relationships with teammates. Brian Moynihan graduated from Marietta high school alongside the class of 1977.
One of Brian’s older brother’s enrolled in courses at Brown University in order to reap the benefits of a prestigious biology program. Brian, on the other hand, applied to four or five schools and it just so happened the Rhode Island bastion of higher education was the best one that accepted him, therefore, without having ever seen the Ivy League institution, he accepted its offer to attend.
He played football his first fall semester there and after the season concluded, was approached by former football players who had switched to rugby; when they asked him to play that spring, he came out on the pitch and never looked back.
His coach, Jay Fluck, remembers him as “clever, smart, and quick. He would not have impressed you as being a wonderful physical specimen. But he understood the game very well, the tactical position where decisions were made. His decision-making skills were quite good.” Brian was “a middle-Ohio kind of guy,” Fluck says. “He did not come from some slick New England prep school. His hair was always disheveled, his shirt hanging out. But he was extremely well-liked and had a tremendous amount of leadership capacity.”
During his playing days, the now banking executive – who rotated between fly-half and inside center – was under six feet and about 175 pounds, notes the Brown Daily Harold. He and his teammates won the Ivy League championship his junior year, in the midst of a string of dominant Brown rugby teams.
“The lessons of leadership do transfer – how to motivate people, how to try to get people to do more than a team can do apart,” Moynihan says whilst identifying ways sports experience can transfer favorably to a corporate environment. “You can only win in rugby if you play as a team. I mean, every person has to carry the ball, every person has to tackle, every person has to pass the ball, so you have to work as a team.”
Fluck also describes him as having been “a real guys’ guy, very bright, extremely energetic, extremely ambitious in all aspects of his life. He was always busy and always active. You saw that in his rugby.” The Southeast Ohio native played competitive rugby until the age of 31 years old, at which point, he determined it wasn’t plausible to invest the amount of time necessary to seriously compete against the younger, faster, and stronger athletes.
A history concentrator, Brian Moynihan earned a Bachelor of Arts from Brown University in 1981.
University of Notre Dame
Following his championship gilded years at Brown, Moynihan went on to attend law school at the University of Notre Dame, where he earned a Juris Doctor.
“My grandfather and my uncle both went to Notre Dame, so I had a great Notre Dame tradition,” he shared with Irish America. “It was the best place in the world to go to law school. It was a very supportive place and we had more fun than we probably should have had. It’s a great school for a lot of reasons, but the law school was small, you really knew the professors, you really knew the undergraduates. I played rugby so it was fun, too.”
The Career of Brian Moynihan
Juris Doctor finally in hand, Moynihan started his legal career at a Rhode Island law firm called Edwards and Angell. While practicing law for the first time professionally, he continued to play rugby on the side, and would occasionally come into the office the next morning with a black eye or cut over his eye or a wounded arm perhaps, yet the physical injuries failed to bother him and certainly never affected his unrelenting work ethic.
“Brian was a fellow who gave no quarter,” says Jim Skeffington, a former colleague, and Partner at Edwards Angell Palmer & Dodge LLP. What made the biggest mark, he adds, was Moynihan’s analytical mind – it’s something that a client noticed.
Their law firm did work for Fleet Financial, a Providence-based bank. In 1991, Moynihan was an indispensable part of the team that helped structure a very complicated contract for Fleet as they bought out the Bank of New England. So impressed by him come transactions end, legendary banking executive Terry Murray returned to Fleet’s general counsel, Bill Mutterperl, and reported, “this guy’s too smart to be a lawyer, why don’t you get him in here.”
Entering the business side of corporate America was a huge career shift and risk for Moynihan. As he weighed how the decision could impact his blossoming family, he reasoned that Murray’s steadfast support and sincere willingness to help him adjust should ease the transition process.
“I had practiced law and done it well, I think, but what I hadn’t done was ever manage people, manage a company, driven people through an integration, or re-engineered a company, and they quickly started throwing me into all of this stuff,” he admits. “You just have to take the opportunities that exist. I had to make the leap from being a partner at a law firm, making decent money, having almost two kids, and I had to make the leap to be successful.”
During his thirties, Brian Moynihan found himself at the forefront of one of the banking industry’s greatest expansion campaigns to date. Fleet went from being the third-largest bank in New England to the largest after their $3.7 billion acquisition of Shawmut National Corporation in 1995. That same year, Fleet announced their $3.26 billion deal to buy out the US branch network (in New York and New Jersey) of the British National Westminster Bank.
Two trips around the sun later, Fleet acquired Quick & Reilly discount brokerage and their deep-discount, online subsidiary Suretrade. “He’d [Brian Moynihan] not only negotiate the deal and hammer down the price, he’d oversee all the post-merger work to align computer systems and trim the headcount,” Murray tells Fortune. “He could accomplish in seven or eight months what the management at other acquirers would take years to do.”
But their biggest purchase came when the ambitious executive team purchased BankBoston for $16 billion in March 1999. The blockbuster merger formed FleetBoston, America’s eighth-largest bank and a financial powerhouse projected to serve some 20 million East Coast residents.
Throughout this historical expansion process, Moynihan led divisions from corporate strategy and development to global wealth and investment management.
“His stamina was extraordinary,” says Mike Lyons, who in his early twenties worked with Moynihan at Fleet. “He’d leave the office at 6:30, and on the way out tell me, ‘Come to my house at nine, and bring your laptop.’ Then we’d work for a couple more hours and start again at around 7 a.m. His mind was always working nonstop.”
A stringent condition established upon their approving the climactic BankBoston acquisition, the Justice Department stipulated Fleet release ownership of 280 bank branches. Moynihan advantageously satisfied the demand by denying offers from the nation’s largest banks, and instead, selling the locations to a smaller, less-competitively equipped financial firm known as Sovereign Bancorp. In a single swift maneuver, keeping adversaries out of his market and leaving potential customers throughout the region to such promising capitalistic whims which may go along with having no better banking option available but FleetBoston.
“What I always tell kids is just take the leap,” he says, and “make sure you understand the people you’re doing it with because that’s what’s going to make you successful.”
Bank of America
In 2004, Bank of America, based in Charlotte, North Carolina, and wielding a strong California franchise, paid about $48 billion in stock for FleetBoston. Combined, the institution would form America’s second-largest bank in assets and would control nearly 10 percent of the nation’s deposits with 5,700 branches coast to coast in 29 states.
Brian Moynihan was tapped to lead the new entity’s global wealth management businesses before later being appointed General Counsel – a role he held for just 40 days. “I couldn’t keep a job for a while there, let’s just say that I had probably five jobs in a year. Largely because we were doing deals and things were shifting around,” he explains.
As the Great Recession peaked, a Meryll Lynch merger soured, and the financially terrifying consequences of their Countrywide acquisition surfaced, Bank of America’s chief executive, Ken Lewis, handed in his resignation, informing board members he’d be gone by years end.
Bank of America went from being ripe with profits in the early 2000s to being the recipient of two separate federal bailouts that totaled $45 billion during the financial crisis. Pre-2008, shareholders enjoyed a stock price of $54 and a $245 billion market capitalization, by early 2009, Bank of America shares plunged below $4.
Bank of America Chief Executive
The company’s board had only a couple of months to appoint a new chief executive and managed to narrow down the race between two prospective internal candidates, one who Wall Street analysts believed lacked adequate experience and another said to be frightfully close to the disastrous Merill Lynch deal. Amidst the frantic search for Lewis’ successor, Moynihan, likely the former of those two men, delivered a stirring comeback strategy underscored by a straight-to-the-point single-page summary.
In December 2009, the board, dominated by FleetBoston veterans who had seen the Ohio native’s work ethic first-hand, appointed Brian Moynihan CEO of Bank of America. The financial powerhouse issued a statement by its chairman, Walter E. Massey, saying, “Brian’s wide range of experience, his relationships inside and outside of the company, and his demonstrated ability to understand business dynamics and effect constructive change made him the best person for the position.”
This announcement afforded no time for celebration – Bank of America was sinking fast. The heaviest weight, among others, dragging the enterprise down may have been their Countrywide acquisition. Per Forbes, Countrywide’s toxic mortgage-flogger subsidiary famous for liar loans, no-doc mortgages and a chief executive who epitomized the ugliness of corporate greed, was imploding and making headlines daily.
Bank of America’s public image plummeted even further as their own shareholders prepared to sue over the Merrill Lynch debacle, claiming that Bank of America was agreeing to billions in obscene bonuses for executives and other employees while it was hiding crucial information about the troubled investment bank’s health prior to the deal.
Adding insult to injury, Bank of America submitted a capital plan to the Fed in January 2011 that proposed a “modest increase” in their common dividend starting in the second half of that year. The Fed objected to the dividend increase, however, accepted the plans of their competitors – inadvertently suggesting Bank of America’s recovery waned behind the pack.
Brian Moynihan Chats with Warren Buffett
At the very least, Moynihan didn’t have to concern himself with repaying the lofty $45 billion debt his company owed U.S. taxpayers as part of the Troubled Asset Relief Program; his predecessor, Lewis, rather impressively took care of those dues prior to relinquishing the chief executive role.
The former rugby star’s complicated path forward for the $2 trillion bank wasn’t flashy, offered no expedient cure-all, and instead, embodied a low-risk model that supported steady growth. Some may have deemed it “boring” but simply cutting costs, selling off non-core assets, building capital, and serving existing customers better proved to be exactly the no-frills, pure-sense approach Bank of America needed.
“We had sufficient capital and earnings power to get through the crisis, but it was all about perception,” says Moynihan. “We had to show the world a source of capital, not because we needed it, but to get the negative attention off of us.”
Then, on August 22nd, 2011, came a call from none other than the Oracle of Omaha. “I’ve got an idea,” Warren Buffet said to Brian Moynihan before sharing his plan to purchase $5 billion in Bank of America preferred shares.
“We don’t need it,” Moynihan told him, despite his stock having had lost roughly a third of its value that month alone. Buffet rebutted, “If you needed it, I wouldn’t be making the offer.” Ultimately, the two hashed out terms for a deal that amounted to Buffet’s Berkshire Hathaway buying 50,000 shares of cumulative perpetual preferred stock with a 6 percent annual dividend.
“My teammates went back to work the next day saying, ‘the smartest investor in the world put $5 billion overnight into this company,'” remembers Moynihan. “I talked to him for the first time in my life on Monday at 11, we had the agreement signed on Tuesday by 8 or 9 am and the money by Thursday.”
Buffett later revealed to CNBC that the Bank of America investment was an idea that came to him while taking a bath earlier in the week. When asked why he would invest at such a volatile juncture, Buffett said bank’s shares “have gone down a lot.”
In a more official statement following the investment, he referred to Bank of America as a strong, well-led company, adding, “I am impressed with the profit-generating abilities of this franchise, and that they are acting aggressively to put their challenges behind them. Bank of America is focused on their customers and on serving them well. That’s what customers want, and that’s the company’s strategy.”
More Bumps in the Road
After Bank of America imposed hefty credit card fees that upcoming October, including a $5 debit card fee, President Obama cast criticism on the scheme, calling such charges “not good business practice.”
“You don’t have some inherent right just to, you know, get a certain amount of profit, if your customers are being mistreated,” the President said. “this is exactly the sort of stuff that folks are frustrated by.”
The same year, Senator Dick Durbin of Illinois took to the Senate floor with a Bank of America debit card in his hand and urged the public to “get the heck out of that bank.” The company’s shares again fell below $5 shortly after. By January 2012, 24/7 Wall St. published a piece ranking Bank of America among the 10 most hated company’s in the United States.
In 2014, a jaw-dropping $4 billion accounting error at Bank of America pulled its stock value down 6 percent in a single day and forced the financial firm to suspend plans to raise its dividend and buy back stock. The mistake, made in accounting data sent to the Federal Reserve, had been happening for several years, and served as an embarrassing blow to the bank’s already fragile reputation. The firm said their error was caused by an “incorrect adjustment” related to bad debts the bank assumed when it acquired troubled Merrill Lynch.
That summer the Department of Justice reached a $16.65 billion settlement with Bank of America – the largest civil settlement with a single entity in American history - to resolve federal and state claims against Bank of America and its former and current subsidiaries, including Countrywide Financial Corporation and Merrill Lynch.
“This historic resolution – the largest such settlement on record – goes far beyond ‘the cost of doing business,'” trumpeted Attorney General Eric Holder. “Under the terms of this settlement, the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers and communities affected by the bank’s conduct. This is appropriate given the size and scope of the wrongdoing at issue.”
Leading the Turnaround
Although Buffett’s $5 billion capital injection didn’t mean life or death, it certainly kept them a lot further from folding had they not received such an investment. Keep in mind, between 2003 and 2009 Bank of America made six or seven major acquisitions, and successfully merging all of them together, including some 300,000 people, is difficult at any time, let alone during the worst economic collapse since the Great Depression.
Moynihan’s first order of business was to sell off assets that weren’t critical to the bank’s newfound core principles. “Who are our customers? What do they need from us? And what can we be good at?” he explains. “Changing the mind-set requires getting people to stop thinking about the market share, and start thinking more about the value of a product for the customer.”
By 2014, Bank of America had cut loose its Canadian credit card, Spain card, and Virgin Money Partnership, as well as LaSalle Global Trust, Columbia Management, and Merrill’s overseas wealth management business. In total, the bank shrunk its legal entities from over 2,000 to 1,300 and sold more than $70 billion in non-core assets. As a result, its capital markets balance sheet remarkably went down to about $600 billion from $1 trillion in 2009.
On another front, the Merrill Lynch merger began ironing out quite well come 2011, when the global banking and markets unit of Bank of America, which included many of the operations it acquired in the Merrill merger, earned $3.7 billion in the first half of the year.
After three consecutive years of declines, Bank of America’s revenue finally increased in 2013 to $90 billion, up 7% from the prior year. Profits nearly tripled in 2013 to $11 billion from $4 billion.
“Whether everyone is down on him, or everyone is praising him, he’s completely unaffected,” Lyons observes of Brian Moynihan. “He puts his head down and advances with an intensity I’ve never seen before.”
Perhaps hindering the bank most was what came to be known as the worst deal in the history of the financial services industry: Bank of America’s Countrywide acquisition. The billions of dollars that Bank of America Merrill Lynch was earning from its businesses on Wall Street were being wiped out by the red ink flowing out of Countrywide, wrote the New York Times. Bonuses were on the line, and so were jobs.
“It’s been a major slog through the mud. The mortgages [mostly from Countrywide] are overshadowing everything,” reported Henry Mulholland, the head of equities for the Americas, while adding that inside the company, however, “there is a broad consensus that we will have our day – and the stock will be looked at very differently.”
Moynihan recruited a former FleetBoston colleague of his, named Terry Laughlin, to help assess and solve the financial firm’s faulty loans problem. At first, Bank of America took a hard-lined, aggressive, and, some might say, messy approach to legally pursuing individuals who were unable to pay their home loans. Eventually, they recognized that it was impossible to run a consumer business while alienating hundreds of thousands of people.
The bank quietly pivoted towards a more collaborative approach – writing off an enormous amount of principal and writing down interest rates – and their costs went down while their reputation and stock price went up, more than doubling between 2012 and 2014. Thereafter, Harvard Business Review records, the problematic Countrywide “borrowers” became the potentially profitable “customers” the bank originally acquired; bankers tried to find outcomes that worked for both the bank and their customers in what was an admittedly lousy situation.
Utilizing a more cooperative strategy, by mid-2014, Bank of America had worked through some 3 million delinquent loans and had only 275,000 more to go. As far as Warren Buffett was concerned, resisting pressure to bankrupt his company’s Countrywide subsidiary was one of Moynihan’s most pivotal decisions. “I remember Wall Streeters urging that action. It was such a cesspool that people felt cleaning it up would be prohibitive,” Buffett says. “It was a tough decision – he knew he’d be writing big checks – but he chose to work his way through Countrywide’s problems instead.”
With regards to the distressing situation stemming from his predecessor’s acquisition, in hindsight, Brian Moynihan himself believes, “from the standpoint of the country, it was lucky that they ended up in the hands of someone that could actually take the pounding we did and get through it. Because if we would have gone into bankruptcy, you would have had 6 or 7 million mortgage holders involved in the bankruptcy, and that would have just been a disaster.”
Rooted in rejuvenated attention on how to best serve customers, Bank of America’s miraculous turnaround became unmistakenly evident by 2018, when the bank’s annual profits hit a record $28.1 billion. Not only did Moynihan’s multi-faceted approach fix mistakes of yesteryear, it was also geared towards aiding the future prosperity of account holders.
He had the bank change an overdraft policy that earned them lucrative fees amounting to an estimated $2 billion per year. Laughlin was also assigned the task of simplifying bank processes, for example, reduce Bank of America’s checking account options from 70 to an efficiently manageable 3.
“I was worried that he’d just keep shrinking the bank,” says John McDonald of Autonomous Research. “His genius was coupling risk reduction and downsizing with a responsible growth mantra.” McDonald credits Brian Moynihan with using digitization not just for the common purpose of reducing costs, but to make the consumer experience simpler and more satisfying, and hence furnish more mortgages, car loans, investment portfolios, and credit card credit to its increasingly affluent customers.
What were the results of improving the financial standing of his customers? In 2019, Bank of America’s largest sector, consumer business, grew consumer deposits by 5% and loans by 7%, and revenues increased by 2.6% or $969 million (to another annual record of $38.6 billion). Because operating expenses continued to fall, almost 90% of that revenue increase flowed to net earnings. That raised the consumer division’s net profits by 7% to $13 billion.
Colleagues describe him as a hard worker who is smart but unassuming and has a tendency to speak too fast, yet says Moynihan, “people ask, ‘Why do you eat quickly and speak quickly?’ and I say, ‘If you have ten people at the table every night [referring to his upbringing], you start to learn if you don’t do those two things, then you starve and you’ll never get a word in.'”
Re-Investing Capital in Employees
Since Brian Moynihan became CEO of Bank of America, the company’s minimum hourly wage has increased by more than 121%. In the last four years alone, Bank of America raised the minimum hourly wage to $15; in 2019 it rose to $17, and in 2020, to $20 – one year ahead of schedule.
In May 2021, Bank of America announced it will raise its U.S. minimum hourly wage to $25 by 2025.
“A core tenet of responsible growth is our commitment to being a great place to work which means investing in the people who serve our clients,” said Sheri Bronstein, chief human resources officer at Bank of America. “That includes providing strong pay and competitive benefits to help them and their families, so that we continue to attract and retain the best talent.”
The banking giant’s pay-for-performance philosophy reinforces its core values and culture by inspiring employees to do great work, encouraging and retaining talent, and building trust within teams. Bank of America’s efforts have been recognized by a number of external organizations including LinkedIn and Fortune, as the only financial services company included in Fortune’s “Best Big Companies to Work For” list for three consecutive years.
Over the duration of Moynihan’s tenure, investing in employees has undoubtedly contributed to Bank of America’s stock performance as the price of a single share has increased from $15 when he took over in December 2009 to $40 as of September 2021.
A Securities and Exchange Commission filing showed Buffett’s conglomerate, Berkshire Hathaway, bought 33.9 million additional shares of the banking giant in July 2020. That increased Berkshire’s stake in Bank of America by $813.3 million to more than $24 billion.
“Nothing can basically stop America,” Buffett told concerned shareholders after the investment, whilst simultaneously addressing global economic uncertainty amidst the coronavirus pandemic. “The American miracle, the American magic has always prevailed and it will do so again.”
Technological Advances under Brian Moynihan
Keeping up with humanity’s technological leaps between 2009 and the 2020s also served as a crucial war front in Moynihan’s struggle to return Bank of America to its former glory. the digital team at the bank is blowing the competition away, and more importantly, providing incredible value to their customer’s via digital platforms and services.
As of August 2021, more than 70% of Bank of America clients are actively using digital channels for more of their needs, including 72% of consumer and small business clients, 80% of wealth management clients across Merrill and Bank of America Private Bank, and 75% of global banking clients. Furthermore, 85% of deposit transactions are being made through the Bank of America app, ATMs and other automated channels.
“We are delivering the best financial technology to help make our clients’ financial lives better,” said David Tyrie, head of digital at Bank of America. “To elevate each client’s digital journey across their entire relationship with us, we focus on their unique needs and aspirations so that we can deliver individualized digital experiences.”
More than 4.4 million clients have engaged with Life Plan to set and track financial goals, making it the company’s most rapidly adopted feature to date. All generations are engaging with the program, particularly Millennials, who make up 43% of its users.
Over 14 million Bank of America clients, including small businesses, use Zelle, a fast, safe and easy way to send and receive money with friends, family and others you trust. Digital now makes up 25% of small business sales, up from 19% last year. From small businesses to large corporations, companies also expect a compelling digital experience and are turning to these channels for more of their needs.
Bank of America’s digital leadership has been further solidified via various awards and recognitions throughout the first half of 2021, including No. 1 rankings from J.D. Power in customer satisfaction among national banks for both online banking and mobile banking apps. Most recently, Javelin Strategy & Research named Bank of America “Best in Class,” its highest honor, in both mobile and online banking for the fifth consecutive year.
“This is not about me. I have this job for a short time,” Brian Moynihan humbly acknowledges. “What we have to do is build a lasting capability. The other thing is that you always have to have a healthy fear of what could happen if you don’t get this right.”
If you enjoyed this story on the life and rise of Bank of America CEO Brian Moynihan, be sure to check out our biography of Wells Fargo CEO Charles Scharf!