Bank of America retrenches as rivals grow
A Bank of America billboard on a street corner in Times Square in New York City.
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Kai Ryssdal: Beleaguered Bank of America did something today it hasn't done four long years. It hosted an investor conference, a chance for shareholders to chat up management and figure out what the heck is going on with a company that lost $3.5 billion last year.
B of A's in the middle of a makeover after a long bout of indigestion, thanks to its purchases of Countrywide and Merrill Lynch, not to mention the whole financial crisis itself. The country's biggest bank has lots of work to do to get back to normal, but early reviews from investors are mostly positive, as our New York bureau chief Heidi Moore reports.
Heidi Moore: Bank of America said today the biggest thing its customers want is to restore their damaged sense of financial well-being. You could say the bank wants the same thing for itself.
Jeff Harte, an analyst with Sandler O'Neill, said Bank of America pleasantly surprised investors by not revealing any new financial disasters.
Jeff Harte: The biggest positive has probably been that there hasn't been a big negative. Let's face it, they've been in the eye of every storm. I think expectations are very low.
Bank of America's big struggle has been to contain the lawsuits and losses from bad home mortgages that it inherited from Countrywide. CEO Brian Moynihan said part of the bank's strategy is to cut costs elsewhere.
Brian Moynihan: Many you asked me about expenses and they are not satisfactory right now, there is no question. We're still eating large costs to deal with mortgage issues.
That's going to take time and people to resolve. But Moynihan predicted the bank will turn in earnings of $40 billion before taxes this year. Bank of America will cut staff and close up to 10 percent of its branches. The bank has already sold off investments to focus on its main businesses; in the process, it raised $22 billion.
But it won't be using that money for a buying spree. Moynihan jokingly declared that the bank will get a "peace dividend" by not buying more companies like Countrywide or Merrill Lynch. Here's Harte:
Harte: They're in a position where they've got the businesses they need or want. It's a matter of becoming more efficient.
Bank of America expects its cleanup to last several years. The question now is whether it will lose ground as it makes cuts while big rivals -- like JPMorgan and Wells Fargo -- are talking about their plans to add bankers and branches.
In New York, I'm Heidi Moore for Marketplace.