Bank of America facing breakup calls after results fall short

Bank of America boss Brian Moynihan is fielding more questions about breaking up the bank after its latest results lagged rivals.

The second-biggest bank by assets has had a rough couple of years dealing with record legal fines and multiple delays in returning capital to shareholders — and its first-quarter performance didn't help matters.

BofA posted net income of $2.98 billion, or 27 cents per share, compared with a loss of $514 million, or 5 cents a share, a year earlier. Overall revenue fell 5.9 percent to $21.42 billion.

While lower legal bills boosted the bottom line, the bank failed to benefit from a trading rebound that has lifted revenue at rival Wall Street firms.

A shareholder proposal would split the sprawling bank into two companies: one that would do traditional lending and deposits, and another for trading.

"Our concern too is that a megabank such as Bank of America may not simply be 'too big to fail,' but also 'too big to manage' effectively so as to contain risks that can spread across BoA's business segments," the proposal says in the bank's proxy statement.

The bank tried to prevent the proposal from being put to a vote at its May 6 shareholder meeting, but the Securities and Exchange Commission said it needed to include the proposal along with those it supported.

Mike Mayo, a prominent Wall Street analyst and critic of big banks, raised the proposal during a conference call Tuesday to discuss BofA's results.

"The proxy says that your board believes the proposal would not enhance stockholder value," said Mayo, an analyst at CLSA. "If that's the conclusion of the board, why not share some of the insights of the board to investors?"

Moynihan said that the bank has already "done a lot of simplification" such as shrinking assets in half, to $2.1 trillion, from as much as $4 trillion in 2010.

"We'll continue to provide insight," he said. "The question would be, what would we look like after? And we'd have capital we can't deploy and we'd have less earnings power."

Glenn Schorr, an analyst at ISI, asked Moynihan why "the board is so against shareholders voting for it," and what the bank would actually have to do if shareholders voted for the proposal.

Moynihan said it was a "core board duty" to determine the best way to return value to shareholders.

Bank of America shares were down less than one percent at $15.70 in midday trading on Tuesday.

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