Bank of America's expenses

[PlanMaestro]

Report: Bank of America workforce shrinking

http://www.charlotteobserver.com/2012/04/20/3185600/report-bofa-workforce-shrinking.html

 

The bank’s total full-time equivalent headcount fell to about 279,000 at the end of the first quarter, down about 4 percent from the year before as the company’s signature Project New BAC cost-cutting initiative continues.

 

But those numbers include 2,500 hires in its Legacy Asset Servicing division, the unit dealing with troubled mortgages. Those positions are required to comply with directives in several legal settlements the bank has entered with the federal government and state attorneys general. Bank of America is now required to provide a “single point of contact” for homeowners going through loan modifications or foreclosure.

 

Excluding hires in the troubled-mortgage division, the bank’s headcount is down 5,600, or 2 percent, since the end of 2011, and 20,000 from last year, Chief Financial Officer Bruce Thompson said in a conference call with analysts. That’s a decline of about 7 percent over the year.

 

At the same time, Bank of America is increasing its offshore and contractor levels. Such so-called “third-party staffing” in the mortgage unit increased by one-third in the quarter, reaching 16,000 people. The bank did not disclose third-party staffing in other divisions.

 

Staffing levels in the troubled-mortgage unit will come down starting in the second half of the year, CEO Brian Moynihan said.

 

Bank of America also continued to close branches in the first quarter as it works to cut expenses in its retail unit. The bank closed a net 51 branches in the quarter, and is targeting 750 closings over the next few years, Moynihan said.

 

Potential credit-card customers will see less direct mail coming to their homes as Bank of America changes its strategy to bring in new cardholders, Thompson said on the call with analysts.

 

Instead, the bank will focus more on using its branches and website to bring in more credit-card customers.

 

 

Bank of America reported $800 million in litigation expense over the quarter, but less than half of it was mortgage-related, Thompson said.

 

Though the $25 billion mortgage-servicing settlement with state and federal authorities was announced in the first quarter, the bank already had reserved funds for its penalties.

 

The bank also has been battling lawsuits involving auction-rate securities, checking-account overdrafts and its acquisition of Merrill Lynch, according to its most recent annual report.

[Parsad]

Hard to find CEO's who just dig right in, tear it apart, and rebuild.  With rates so low, and spreads narrowing, banks have to cut expenses and get more efficient.  He's just shrinking this sucker to a really ideal level...very focused.  Using Well's cross-selling objective is also better for BAC, so I'm happy the mailings are out and retail contact is where everything is going to be happening.  Cheers!

[PlanMaestro]

BofA to Cut From Elite Ranks

http://online.wsj.com/article/SB10001424052702304868004577376412357712878.html

 

The Charlotte, N.C., company is planning about 2,000 staff cuts in its investment banking, commercial banking and non-U.S. wealth-management units, said people familiar with the situation. Those operations were vastly expanded with Bank of America's 2009 purchase of Merrill Lynch & Co.

 

The reductions are significant because of whom they target: the high-earning employees whose efforts helped Merrill Lynch account for the bulk of Bank of America's profit since the financial crisis.

...

 

Cutbacks aren't Bank of America's only response to surging costs. The bank is loath to cut too deeply in businesses, such as the fixed-income trading operation, that are showing improvement and highly competitive.

 

One structural shift being planned will pool junior investment-banking employees across different industry sectors so the younger bankers can be routed to whatever area is most in demand at that moment, said people familiar with the situation. Proponents say that move will help younger workers gain more experience, while others say it will detract from the bank's service to clients.

....

 

Mr. Montag told his managing directors in 2009 that he wanted the bank to make half its big corporate loans abroad in the coming years. Bank of America Merrill Lynch hit that target at the end of 2011, as non-U.S. large corporate loans increased to 50% of all corporate loans, up from 39% in 2010.

 

Bank of America has been pushing deeper into emerging markets and taking on assignments it once might have rejected as too risky. One example of an emerging-markets deal done under Mr. Orcel that the pre-Merrill Lynch company likely wouldn't have touched was the 2010 initial public offering of Russian aluminum company UC Rusal Ltd., 0486.HK +0.73% a person familiar with the matter said. At Mr. Orcel's prodding, Bank of America also boosted its country-lending limit for Russia to $5 billion from $50 million. The bank also has lifted limits in other countries, such as China and India.

 

Bank of America still lags behind rivals in several key markets overseas, even though it is ranked No. 2 globally by investment-banking revenue. It was No. 6 in investment banking revenue in Europe during the first quarter of 2012, and not in the top 10 in Asia Pacific excluding Japan, according to Dealogic, a financial data company. Last week, Bank of America lost the top executive of its Chinese investment banking operations when Erh Fei Liu left to run a BlackRock BLK +0.26% Inc.-led fund focusing on overseas investments. Mr. Liu was also a veteran of the old Merrill Lynch.

...

 

 

 

 

 

 

 

[JEast]

And they continue to dispose of branches.

Quitely sold 15 branches in Maine which actually had a little profit in it.

 

http://finance.yahoo.com/news/camden-national-bank-grows-acquiring-130000674.html

 

 

Cheers

JEast

 

[nkp007]

Today's WSJ article is framed as if the cuts will lead to BAC shooting itself in the foot. I doubt that's the case, but that's the perception.

 

 

[PlanMaestro]

With Bank of America cutting branches, who’s left behind?

http://www.charlotteobserver.com/2012/08/20/3463840/bofa-branch-cuts-whos-left-behind.html#storylink=cpy

 

More than a year into a plan to shutter hundreds of branches across the country, Bank of America is eliminating more locations than any of its peers, from affluent big-city neighborhoods to rural areas.

 

Nearly a third of the closures last year occurred in low- to moderate-income communities. And while that’s roughly in line with the percentage of such branches in the bank’s overall network, it worries some banking experts and consumer advocates, who say eliminating bank branches has a disproportionate effect on the poor and their neighborhoods, removing important community anchors and raising the cost of banking.

 

At a time when big banks across the country are stepping up efforts to cater to their most profitable customers, advocates worry that others could be left behind.

Bank of America said the closings, part of the efficiency initiative Project New BAC, will allow it to streamline expenses and better serve customers’ changing banking habits. The Charlotte-based lender is ramping up mobile and online offerings, enhancing existing branches and ridding its network of the duplication that resulted from decades of mergers.

 

Bank officials also say they continue to maintain – and add – more branches in low- to moderate-income neighborhoods than other big banks. Branches in those neighborhoods, where the household income is less than 80 percent of the geographic area’s median income, made up 27 percent of the bank’s total network at the end of 2011. That compares with 24 percent for Wells Fargo and 23 percent for JPMorgan Chase, data from the Federal Deposit Insurance Corp. show.

 

Since 2009, 38 of the 117 branches Bank of America has opened – about 32 percent – have been in those lower-income neighborhoods.

The nation’s second-largest lender by deposits has shed a net 262 banking centers since the beginning of 2011, from California to the Carolinas, according to its financial statements. An Observer analysis of federal regulators’ branch closing data and U.S. Census figures found about 53 percent of those closings have occurred in neighborhoods whose median income lagged the countywide median.

 

Of those, about 17 percent occurred in areas where the household income was less than half of the county’s, the data show. The bank closed a branch in a neighborhood of Wilmington last year, for instance, where the median income was just $16,100 per household, well below the $48,550 county figure.

But Bank of America closed more branches than any other bank during that time, the researchers found. Its 157 net closures were more than double the level of the next company on the list, International Bancshares.

 

Wells Fargo, which bought Charlotte’s Wachovia in 2008, closed a net 44 branches in the same period, by comparison. JPMorgan Chase added 219.

 

Bank of America assembled one of the nation’s largest networks of branches through years of acquisitions, with U.S. banking centers peaking at more than 6,000 at the end of 2007 after it bought Chicago’s LaSalle Bank. It now has about 5,600 branches.

 

In spring 2011, chief executive Brian Moynihan said the bank would reduce its branch count by about 10 percent. A few months later, the CEO said the bank planned to eliminate 750 locations in the next few years, a decline of about 13 percent, as it works to slash $5 billion in annual expenses from its consumer operations.

In early 2011, for instance, the bank began testing “specialty” branches in Los Angeles and Washington, D.C. A similar flagship store in Charlotte, unveiled this year, is brimming with high-tech features: Tablet computers for making service requests and learning about new products. Online appointment booking. Access to financial advisers, small-business bankers and mortgage specialists and other perks, all in a sleek space at the base of Bank of America’s headquarters tower uptown.

 

The changes highlight a shift in consumer preference and bank strategy, executives have said. Year over year, foot traffic at Bank of America’s branches has been consistent, for example, but over-the-counter transactions are decreasing, Knox said. People are increasingly visiting banking centers to use ATMs and other services on-site; meanwhile, mobile usage is “exploding” across all demographics.

Bank of America has been expanding its mobile banking services in recent months: It has begun offering mobile check deposit, among other features, and last week announced it was making its BankAmeriDeals program available to online and mobile banking customers nationwide, allowing those customers to earn cash back for using their credit or debit cards. In May, the bank surpassed 10 million mobile banking customers, establishing it as the dominant player in that arena.

 

And it’s hiring more employees who will interact directly with customers at branches. The bank will have hired 1,000 new small-business bankers and 1,700 financial solutions advisers by year’s end, Pace said.

 

The changes mean that when a branch closes, it doesn’t necessarily put customers in that area at a loss, she said. The bank is bringing more services closer to its customers, Pace said. And in some cases, big banks close branches to eliminate duplication, not to exit an area altogether – meaning another location might be a few blocks or miles away.

[Parsad]

The goal of becoming lean, mean, efficient and customer-centric...with a rock-solid balance sheet to boot!  As loan losses and litigation evaporate, the markets will rationalize the business.  Cheers!

[MVP444300]

In my town alone BAC has closed 3 branches from a total of 5 and they have made two of the branches drive in only.  For a small town of 8,000 people that was to many branches to have IMO. 

 

I'm glad to see Brian relentlessly focus on cost. 

[PlanMaestro]

Bank of America Ramps Up Job Cuts

http://online.wsj.com/article/SB10000872396390443816804578004640193683614.html?mod=googlenews_wsj

 

"The proposed year-end total of 260,000 would be the lowest count since 2008 and likely give Bank of America a smaller workforce than J.P. Morgan Chase & Co., Citigroup Inc. or Wells Fargo & Co. The final year-end number could still fluctuate depending on business volumes, said a person familiar with the plans. Bank of America is the second-biggest bank by assets after being surpassed by J.P. Morgan last year."

 

"Hitting the new staffing target would fulfill a year early Mr. Moynihan's pledge to slash the bank's workforce by approximately 30,000."

 

"Through the end of the second quarter, Bank of America had reduced the ranks of junior investment bankers by 23% since September 2011, according to the document."

 

"On the retail side, the planned cuts include 5,300 consumer-banking jobs and 3,200 in the unit that oversees new mortgages, according to a person familiar with the document. The number of employees in global wealth and investment management will remain relatively flat, this person said."

 

"Bank of America is planning to close 200 branches this year on top of 178 it closed in 2011, according to a person familiar with the document provided to management."

 

"When the bank announced in September 2011 the first phase of the cost-pruning campaign, the goal was to get the head count down to 274,000 by the end of the second quarter, according to the document provided to management. The bank came close to hitting that number at 276,000."

 

"Some of the numbers may change depending on volumes in the businesses expected to receive the largest cuts, but the final workforce total at year's end is still expected to be near 260,000, said another person familiar with the 2012 target."

 

 

 

 

 

 

[PlanMaestro]

BofA mortgage workforce swells even as it tightens belt

http://www.reuters.com/article/2012/10/11/us-bankofamerica-mortgages-idUSBRE89A06420121011

 

Bank of America now employs some 42,000 people - or nearly 1 in 6 of its 275,000 employees - in Legacy Asset Servicing, the unit that services problem mortgages. Operating costs in the mortgage servicing business reached $2.7 billion in the second quarter, up 29 percent from a year ago, as the bank added 7,000 workers to handle foreclosure reviews and loan modifications required under government settlements. The bank has also had as many as 16,000 additional contractors working in the unit, according to company reports.

…

 

The $2.7 billion in operating expenses equaled 15 percent of Bank of America's noninterest expense in the second quarter. It is also more than five times as high as the $500 million per quarter that CEO Brian Moynihan has projected the bank could spend on servicing in times of more normal delinquencies. The figure doesn't include mortgage-related litigation expenses.

 

"This is perhaps the biggest earnings lever they have," said KBW analyst Jefferson Harralson.

…

 

Moynihan said in October 2011 that mortgage servicing had peaked, but expenses have climbed since then. In May, he told investors the costs should start coming down in the second half of this year, but then in July he said "meaningful" improvement would not begin until the end of this year or early in 2013.

 

Last month, Chief Financial Officer Bruce Thompson said at an investor conference that lower costs for servicing are "going to be very much in the future."

[meiroy]

 

1. Is the 260000 goal at year's end still achievable?

2. "The bank has also had as many as 16,000 additional contractors working in the unit, according to company reports.", these are not included in the head count to my understanding yet count for the expense. As they are estimated to have a bit of a loss, any chance they are cramming the "bad times" into very short term and the loss should be expected to be considerably higher?  I'm just asking this for fun.