BofA CEO Lewis Buys Nearly $1 Million More Shares
In his latest move to show support of his bank, Bank of America Chief Executive Ken Lewis spent almost a million dollars this week to buy additional shares of his struggling bank.
He also told employees in a memo that the bank's board last week, "unanimously endorsed our business model, strategic direction and the team," at its regular meeting on Jan. 28.
The moves are Lewis' latest effort to convince employees, investors and the board that he and his management team can lead it out of its current crisis.
Lewis purchased 200,000 shares for $958,340 on Wednesday, according to a filing with the Securities and Exchange Commission on Thursday. It's the second time in recent weeks that Lewis has pumped his own money into the Charlotte, N.C.-based bank. Two weeks ago, he bought 200,000 shares for $1.2 million.
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The filing came as the Bank of America's shares rebounded from a 25-year low Thursday afternoon, following other financial stocks higher as reports surfaced that the government may modify accounting rules that have been blamed for contributing to banks' troubles.
Shares of Bank of America rose 14 cents, or 3 percent, to close at $4.84 on Thursday. Earlier in the day, shares had tumbled as much as 20 percent to $3.77—a level not seen since 1984.
Bank of America shares rose over 10 percent in early morning trading Friday.
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The bank's shares have been pummeled in recent days following the disclosure of the bank's first quarterly loss in 17 years and mounting concerns about its recent Merrill Lynch acquisition. There's also unrelenting concerns that the government's future plans to help prop up banks could hurt shareholders.
Last week, Lewis went before his directors in Charlotte for "the longest board meeting in anyone's memory," he told employees in the memo issued Monday.
Some analysts said Lewis' job might be on the line, but lead director O. Temple Sloan Jr. later issued a statement of support for the bank's management team.
In the memo, Lewis called the company's performance in January "encouraging." The "extreme dislocations in the capital markets we suffered last quarter seem to have moderated" but "credit costs continue to be a big issue."
He also acknowledged employees are disappointed about cuts to their bonuses. He noted that higher-ranking executives are taking deeper reductions and that neither he nor his top lieutenants are receiving payouts for 2008, according to the memo.
'Fast Money' on the Bank Bailout:
Investors have been extremely anxious ahead of President Barack Obama's unveiling next week of a new framework for spending what's left of the $700 billion financial bailout which Congress created last year. Investors fear that the administration's moves could hurt shareholders by diluting the value of their stock.
Bank of America has already received $45 billion in government aid, including a $20 billion injection last month to help it absorb losses from its Jan. 1 acquisition of brokerage Merrill Lynch.
On Thursday, Bank of America spokesman Scott Silvestri declined to comment on the stock price, the likely effect of a new rescue plan or calls for management changes.