3 Reasons Brian Moynihan Is Dead-Right for Bank of America Corp (BAC)

Given his experience cleaning up after the unconscionably acquisitive former-CEO Ken Lewis, it’s no surprise that Moynihan appears to agree. Among the three promises he made to B of A’s board upon taking over was that he would “forget all acquisitions, now and forever.” That’s music to most experienced bank investors’ ears.

3. He’s dedicated to returning capital to shareholders
Last but certainly not least, like every good banker, Moynihan is dedicated to returning capital to shareholders. It never ceases to amaze me how few businesses, much less banks, distribute the lion’s share of their earnings to shareholders. It’s almost as if executives and board members have forgotten who owns the company — I say that rhetorically, but I mean it.

So when you come across a bank that follows this shareholder friendly path, you’d be wise to consider investing in it. This is the reason I’m such a fan of New York Community Bancorp, Inc. (NYSE:NYCB), the New York-based regional lender that specializes in multifamily financing. Not only did it avoid the siren song of CDOs and MBSes that ruined many of its peers during the crisis, but it’s continued to pay out between 80% and 100% of its earnings every quarter.

To get back to Moynihan, his two-pronged strategy since taking over in 2010 has been to accumulate a “bulwark of capital” and then distribute all earnings in excess of that once the bank has been given regulatory approval to do so. As an excellent biographical sketch of Moynihan put it, “We’re talking about $25 billion a year, all stuffing shareholders’ pockets.” And first on Moynihan’s list is erasing the aforementioned dilution. “We need to get back most of the shares we issued in the crisis, that caused all the dilution,” Moynihan told Fortune’s Shawn Tully. Again, as I noted above, this is music to any rational shareholder’s ears.

The Foolish bottom line
At the end of the day, B of A’s Brian Moynihan isn’t going to win a popularity or personality contest. But that’s not what you want in a banker. Boring and brilliant are what you want in this regard. And Moynihan is both.

The article 3 Reasons Brian Moynihan Is Dead-Right for Bank of America originally appeared on Fool.com and is written by John Maxfield.

John Maxfield owns shares of Bank of America. The Motley Fool owns shares of Bank of America and JPMorgan Chase.

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